The Rational Expectations Hypothesis Implies That Use of Discretionary Macro-Policy

Multiple Choice

The rational expectations hypothesis implies that use of discretionary macro-policy as a stabilization tool will

A) be ineffective, even in the short run.
B) be effective in the short run but ineffective in the long run.
C) be effective both in the short run and long run.
D) make it possible to trade-off a higher rate of inflation for a lower rate of unemployment.