According to Rational Expectations Theory

Multiple Choice

According to rational expectations theory,

A) there is absolutely nothing government can do, even in the short run, to reduce the economy's unemployment rate.
B) the government can use fiscal policy such as increased government spending or lower tax rates to reduce unemployment.
C) a modern extension of Keynesian economics exists.
D) discretionary fiscal policy is essential for prolonged growth.
E) market participants can be fooled in the long run by monetary and fiscal policy rules.