The Lucas critique argues that because the way people form expectations is based ______ on government policies, economists ______ predict the effect of a change in policy without taking changing expectations into account.
A) partly; cannot
B) only partly; can
C) in no way; can
D) in no way; cannot

Question

Quizplus · Accepted Answer

The Lucas critique posits that because people form their expectations based on government policies, economists cannot accurately predict the effects of policy changes without considering how these expectations might shift.

The Lucas Critique Argues That Because the Way People Form