If we compare the model by Gregory Mankiw with that of Robert Lucas, we realize that
A)both assume rational expectations
B)Mankiw assumes that firms are price takers, while Lucas assumes that firms are price setters
C)Lucas assumes that firms are reluctant to change prices, while Mankiw assumes that firms have imperfect information about prices
D)Lucas assumes that people have good information but make systematic forecast errors, while Mankiw assumes that people have imperfect information and therefore cannot make accurate forecasts
E)all of the above

Question

Quizplus · Accepted Answer

The only option that accurately reflects a similarity between the two models is that both assume rational expectations. The remaining options describe differences between Mankiw's and Lucas's models.

If We Compare the Model by Gregory Mankiw with That