According to the rational expectationists

Question

Quizplus · Accepted Answer

Rational expectationists believe that markets generally function well and that market outcomes reflect the collective expectations of market participants. They argue that government intervention often leads to unintended consequences, hence the belief that in the face of recession or inflation, it might be best to do nothing (B). They also acknowledge the impact of supply shocks, such as the oil price shocks of the 1970s, on the economy's natural level of output (C), and emphasize the role of aggregate supply in driving economic performance (D). Therefore, all the given statements align with the views of rational expectationists.

According to the Rational Expectationists