The idea of rational expectations suggests that
A)Only economic policies that people can anticipate are effective.
B)It is unrealistic for Congress to balance the federal budget during a recession.
C)Discretionary policies and fine-tuning can move the economy to full employment.
D)Economic policies are ineffective if the policies are anticipated.

Question

Quizplus · Accepted Answer

Rational expectations theory posits that if people anticipate economic policies, they will adjust their behavior accordingly, rendering the policies ineffective.

The Idea of Rational Expectations Suggests That