Which of the following is an implication of rational expectations theory?
A) Macroeconometric models based on past behaviour will not be very useful in formulating policy.
B) Business cycles almost always result from a shift in aggregate demand.
C) Wages and prices are set almost entirely at random, so it is pointless to try to model their behaviour.
D) Deviations of output from the natural rate are likely to be serious and long- lived.
E) The economy is like a complex machine that needs to be optimally controlled with the proper policy.
Correct Answer:
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Q3: The staggering of wage and price decisions
Q4: Which of the following was not part
Q5: Which of the following events led to
Q6: The steeper is the IS curve:
A) The
Q7: The research by Robert Hall on the
Q9: Which of the following statements about Keynes'
Q10: The theories of investment were developed by:
A)
Q11: Liquidity preference refers to:
A) the controversy sparked
Q12: According to rational expectations theory, monetary policy
Q13: The neoclassical synthesis had emerged by what
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