Multiple Choice
Which of the following statements is consistent with the rational expectations hypothesis?
A) When it comes to making personal economic decisions, people rarely behave in a rational manner.
B) People combine the effects of past policy changes on important economic variables with their own judgment about the future effects of current and future policy changes.
C) When it comes to making personal economic decisions, people always behave in a rational manner.
D) Every person in the economy is always correct in her predictions about current and future policy changes.
Correct Answer:
Verified
Correct Answer:
Verified
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