Under the assumption of rational expectations, real GDP is determined by

Question

Quizplus · Accepted Answer

Rational expectations theory holds that individuals make decisions based on all available information, including expectations about future economic conditions. In the long-run, the economy's real GDP is determined by the nation's long-run aggregate supply curve, which represents the maximum sustainable output given the available resources and technology. Therefore, choice D is the best answer.

Under the Assumption of Rational Expectations, Real GDP Is Determined