Proponents of rational expectations theory have argued that the sacrifice ratio could be as small as what?
A) 0
B) 2
C) 4
D) 6

Question

Quizplus · Accepted Answer

Proponents of rational expectations theory argue that the sacrifice ratio - the short-run decrease in output that results from lowering inflation - may be minimal or even zero if agents have rational expectations and adjust their behavior accordingly.

Proponents of Rational Expectations Theory Have Argued That the Sacrifice