The Keynesian hypothesis assumes that people know the "true model" of the economy and form their expectations of the future based on this model.

Question

Quizplus · Accepted Answer

The Keynesian hypothesis assumes that people do not have a complete understanding of the economy and its behavior, and therefore cannot form expectations based on a "true model". Instead, they base their expectations on their past experiences and the information available to them, which can be incomplete or inaccurate.

The Keynesian Hypothesis Assumes That People Know the "True Model