One key assumption behind the policy irrelevance proposition is that

Question

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The policy irrelevance proposition, associated with the rational expectations theory, assumes that individuals form expectations about the future in a rational manner, incorporating all available information, including the anticipated effects of monetary and fiscal policies. This implies that systematic policy cannot systematically influence real economic variables like output and employment, because people will adjust their behavior in anticipation of these policies.

One Key Assumption Behind the Policy Irrelevance Proposition Is That