Proponents of rational expectations theory have argued that the sacrifice ratio could be as small as what?
A)0
B)2
C)3
D)4

Question

Quizplus · Accepted Answer

Proponents of rational expectations theory argue that the sacrifice ratio could be as small as zero because they believe that if people have rational expectations, they will adjust their behavior quickly in response to changes in policy. This means that there will be little or no output loss or unemployment in the short run, and therefore no sacrifice ratio.

Proponents of Rational Expectations Theory Have Argued That the Sacrifice