The hypothesis that people's spending decisions are based on all available information,including the anticipated effects of government intervention,is known as
A)The velocity of money.
B)Rational expectations.
C)Fiscal expectations.
D)Rational responses.

Question

Quizplus · Accepted Answer

The hypothesis that people base their spending decisions on all available information, including the effects of government intervention, is known as rational expectations. This means that individuals are assumed to make rational decisions based on their best possible interpretation of all available information.

The Hypothesis That People's Spending Decisions Are Based on All