Rational expectations theory suggests that ________.
A)policy announcements can impact behavior
B)policy announcements have no impact on behavior
C)unannounced policies have no impact on behavior
D)the optimal forecast is identical to the announced policy

Question

Quizplus · Accepted Answer

Rational expectations theory states that individuals make informed decisions based on available information, which includes policy announcements. Therefore, policy announcements can impact behavior according to this theory.

Rational Expectations Theory Suggests That ________