The Theory of Rational Expectations Concludes That

Multiple Choice

The theory of rational expectations concludes that

A) the public's expectations can influence the outcome of monetary policy but not of fiscal policy.
B) the public's expectations can influence the outcome of fiscal policy but not of monetary policy.
C) the public's expectations as to the effects of economic policies tends to reinforce the effectiveness of those policies.
D) by reacting in its self-interest to the expected effects of stabilization policy, the public tends to negate the impact of those policies.