According to the rational expectations theory,
a. on average people have very little idea of what to expect from government policy makers.
b. people form expectations by focusing only on the private sector.
c. people do not consider likely government policies when forming expectations.
d. people form expectations, in part, by considering the probable future effects of changes in government policy.
D
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The absence of barriers to entry in monopolistic competition means that in the long run, firms
A) earn an economic profit. B) earn zero economic profit. C) incur an economic loss. D) earn either an economic profit or zero economic profit. E) earn either zero economic profit or suffer an economic profit.
Which of the following is the latest short run operating target specified to the New York Fed by the FOMC directives?
a. The federal funds rate b. The primary lending rate c. Quantitative easing d. Legal reserves e. The bank rate
If the required reserve ratio were decreased,
a. the money supply would tend to decrease, but the outstanding loans of banks would tend to increase. b. both the money supply and the outstanding loans of banks would tend to decrease. c. the money supply would tend to increase, but the outstanding loans of banks would tend to decrease. d. both the money supply and the outstanding loans of banks would tend to increase.
Keynesians
A. believe capitalism is inherently stable. B. believe the markets in a capitalistic economy are highly competitive. C. argue against the use of discretionary monetary policy. D. contend that government intervention in the economy is desirable.