Which of the following should not be included in a list of fundamental results derived from modern macroeconomic theory?
A) People form expectations about the future based on accurate processing of only accurate information gleaned from their own individual and collective experiences.
B) Policy effectiveness depends highly on its credibility.
C) The economy is generally stable over the long term with long-term growth driven by the sources of growth of potential GDP.
D) All of the above.
E) None of the above.

Question

Quizplus · Accepted Answer

Modern macroeconomic theory, particularly the rational expectations hypothesis, suggests that people form expectations about the future based on all available information, not solely on accurate information from their experiences. This means individuals use both accurate and inaccurate information to form expectations, making choice A incorrect in the context of fundamental results derived from modern macroeconomic theory.

Which of the Following Should Not Be Included in a List