The rational expectations equilibrium approach has influenced modern macroeconomic thinking since
A)most economists now admit that wages are completely flexible and that markets always clear rapidly
B)evidence has shown that recessions have never been policy-induced
C)empirical studies have proven without a doubt that monetary policy is incapable of changing real output
D)many modern economists agree that macroeconomic models need to be developed from basic microeconomic foundations
E)none of the above

Question

Quizplus · Accepted Answer

The rational expectations equilibrium approach emphasizes the importance of microeconomic foundations in the development of macroeconomic theories and models. As a result, many modern economists believe that macroeconomic models should be based on basic microeconomic principles.

The Rational Expectations Equilibrium Approach Has Influenced Modern Macroeconomic Thinking