The rational-expectations hypothesis implies that there is no need for government stabilization policies.

Name: The rational-expectations hypothesis implies that there is no need for government stabilization policies.
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Question

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The rational-expectations hypothesis assumes that individuals have perfect foresight and can accurately predict future economic conditions. As a result, they will adjust their behavior in anticipation of government policies, making those policies ineffective in stabilizing the economy.

The Rational-Expectations Hypothesis Implies That There Is No Need for Government