Which of the Following Is True About Rational Expectations

Multiple Choice

Which of the following is true about rational expectations?

A) People form expectations on the basis of information about past as well as future actions of policy makers.
B) Wage agreements do not reflect inflationary expectations if workers expect continued inflation.
C) Rational people cannot easily anticipate the effects of discretionary policy on the price level and output.
D) The role of expectations is applicable in the context of monetary policy only.
E) The effectiveness of a particular government policy is independent of people's expectations.