If People Form Expectations in Accordance with the Rational Expectations

Multiple Choice

If people form expectations in accordance with the rational expectations hypothesis and they correctly anticipate policy actions, then the policies will:

A) not impact output in either the short run or the long run.
B) impact output in both the short run and the long run.
C) impact output in the short run but have no effect in the long run.
D) impact output in the long run but have no effect in the short run.