A Mainstream Criticism of Rational Expectations Theory Is That

Multiple Choice

A mainstream criticism of rational expectations theory is that

A) the theorists confuse correlation with causation in interpreting the empirical evidence.
B) people do not make consistent forecasting errors that can be exploited by policymakers.
C) many markets are not purely competitive and do not adjust rapidly to changing market conditions.
D) the data indicate that economic policy does not affect real GDP and employment.