Economists of the Rational Expectations School

Multiple Choice

Economists of the rational expectations school:

A) have no confidence in the ability of workers and firms to observe and react to economic events.
B) believe workers and firms behave the same regardless of what the Fed does.
C) have great faith in the ability of monetary policy makers to maintain a full employment economy with stable prices.
D) believe that effective monetary policy can shift the potential level of output to the right.
E) believe workers and firms make decisions based on what they think monetary policy will be in the future.