Those of the rational expectations school
A)favor monetary rules because they believe we know too little about how the economy works
B)favor monetary rules so that workers and firms do not get any unanticipated surprises from the Fed
C)are those who favor an "active approach" to policy and therefore reject monetary rules
D)oppose any monetary rules because they believe rules impede the natural self-correcting mechanism of the economy
E)neither oppose nor favor monetary rules

Question

Quizplus · Accepted Answer

Those in the rational expectations school believe that people form their expectations about future economic conditions based on all available information, including past experience, and therefore, any attempt by the Fed to surprise workers and firms with unanticipated policy changes will be futile. They advocate for clear and consistent monetary policies, which can help anchor expectations and reduce uncertainty in the economy. Therefore, they favor monetary rules to minimize surprises from the Fed.

Those of the Rational Expectations School