What Did Proponents of Rational Expectations Argue About the Sacrifice

Multiple Choice

What did proponents of rational expectations argue about the sacrifice ratio and why?

A) The sacrifice ratio would be high because it was rational for people not to immediately change their expectations.
B) The sacrifice ratio would be high because people might adjust their expectations quickly if they found anti-inflation policy credible.
C) The sacrifice ratio could be low because it was rational for people not to immediately change their expectations.
D) The sacrifice ratio could be low because people might adjust their expectations quickly if they found anti-inflation policy credible.