Those Who Accept Both the Rational Expectations Hypothesis and the Assumption

Multiple Choice

Those who accept both the rational expectations hypothesis and the assumption of flexibility of wages and price would likely argue that

A) saving and investment do not contribute to economic growth.
B) active policy making does not contribute to economic stability.
C) if policy makers are willing to accept a high inflation rate, they can reduce unemployment to a point below the natural rate.
D) policy makers can eliminate fluctuations in the level of business activity with careful planning of a widely publicized monetary policy.