Proponents of rational expectations theory argued that,in the most extreme case,if policymakers are credibly committed to reducing inflation and rational people understand that commitment and quickly lower their inflation expectation,the sacrifice ratio could be as small as

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Proponents of rational expectations theory argue that if policymakers are credible in their commitment to reducing inflation, rational individuals will quickly adjust their expectations and behave accordingly, resulting in a minimal sacrifice ratio. In this extreme case, the sacrifice ratio could be zero, as there would be no need for a prolonged period of high unemployment or other economic costs to bring inflation under control.

Proponents of Rational Expectations Theory Argued That,in the Most Extreme