Economists Have Focused More Attention on the Formation of Expectations

Multiple Choice

Economists have focused more attention on the formation of expectations in recent years. This increase in interest can probably best be explained by the recognition that

A) expectations influence the behavior of participants in the economy and thus have a major impact on economic activity.
B) expectations influence only a few individuals,have little impact on the overall economy,but can have important effects on a few markets.
C) expectations influence many individuals,have little impact on the overall economy,but can have distributional effects.
D) models that ignore expectations have little predictive power,even in the short run.