The theorists of the rational expectations school:
A)favor monetary rules because they believe individuals 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 reject monetary rules.
D)oppose any monetary rules because they believe rules impede the natural self-correcting mechanism of the economy.
E)do not believe in implementing discretionary policies.

Question

Quizplus · Accepted Answer

The rational expectations school theorists favor monetary rules to avoid unanticipated surprises, as they believe individuals form expectations based on all available information, including anticipated policy actions.

The Theorists of the Rational Expectations School