The Rational Expectations Approach Differs from the Perfect Foresight Approach

Multiple Choice

The rational expectations approach differs from the perfect foresight approach, since the rational expectations approach assumes that

A) the monetary policy multiplier is non-zero in the long run, but only if monetary policy is anticipated
B) the monetary policy multiplier is non-zero in the long run if monetary policy is unanticipated
C) the monetary policy multiplier is non-zero in the short run if monetary policy is unanticipated
D) people make systematic errors
E) after a disturbance, GDP never returns to trend