The macroeconomic theory stating that because workers and firms take all information into account, only unexpected changes in the money supply affect aggregate output is called _____ theory.
A) real business cycle
B) rational expectations
C) new classical
D) supply-side

Question

Quizplus · Accepted Answer

The statement describes the rational expectations theory, which posits that economic agents are able to accurately predict future changes in economic variables and adjust their behavior accordingly. This means that only unexpected changes, such as unanticipated changes in the money supply, will have an impact on the economy. The other options (A, C, and D) do not directly address this concept.

The Macroeconomic Theory Stating That Because Workers and Firms Take