Rational expectations assumes that individuals
A) can accurately predict the future.
B) make predictions based on the past behavior of the economy.
C) form their predictions of macroeconomic variables randomly.
D) have perfect foresight.
E) none of the above
Correct Answer:
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Q16: Explain what effect an increase in future
Q17: The IS curve shifts to the left
Q18: Suppose there is a reduction in expected
Q19: Suppose there is a fiscal expansion in
Q20: The IS curve shifts to the right
Q22: Assume individuals consider only the short-run effects
Q23: A reduction in which of the following
Q24: The IS curve becomes steeper when
A)government spending
Q25: Suppose the Fed increases the money supply
Q26: Adaptive expectations assumes that individuals
A)can accurately predict
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