The belief that the government can do absolutely nothing in either the short run or the long run to reduce the unemployment rate, because people will anticipate the government's actions, is held by the:
A)rational expectations school.
B)neo-Keynesian school.
C)classical school.
D)supply-side school.
E)Keynesian school.

Question

Quizplus · Accepted Answer

The rational expectations school believes that individuals and firms use all available information to anticipate government actions, rendering policy interventions ineffective in reducing unemployment.

The Belief That the Government Can Do Absolutely Nothing in Either