Which of the following would be a violation of the rational expectations assumption?
A) "Over the past twenty years, people have consistently over- predicted the inflation rate for the following year."
B) "Over the past twenty years, people have never once accurately predicted the inflation rate for the following year."
C) "The RBA's announcement that it might ease interest rates caused an immediate decrease in short- term rates, even before the RBA took any action."
D) Both A and B.
E) Both A and C.
Correct Answer:
Verified
Q15: Suppose there is a monetary expansion. This
Q16: Suppose there is an increase in the
Q17: Assume individuals consider only the short- run
Q18: Assume individuals consider only the long- run
Q19: Suppose there is a decrease in the
Q21: An increase in which of the following
Q22: Which of the following will cause aggregate
Q23: Suppose that the RBA raises the current
Q24: Assume individuals consider only the medium- run
Q25: Suppose there is a decrease in expected
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents