People combining the effects of past policy changes on important economic variables with their own judgment about the future effects of current and future policy changes is consistent with

Question

Quizplus · Accepted Answer

The combination of past policy changes with current and future policies to make economic predictions is consistent with the rational expectations hypothesis, which suggests that individuals use all available information to form their expectations of the future. This contrasts with passive policy making where individuals do not take into account policy changes, and active policy making where individuals try to actively influence policy changes. Frictional unemployment is a separate concept altogether and not related to this context.

People Combining the Effects of Past Policy Changes on Important