If the rational expectations critique of policymaking is correct, then A) policy
ID: 1121667 • Letter: I
Question
If the rational expectations critique of policymaking is correct, then
A) policymakers will be unable to keep unemployment below the natural rate.
when, for example, the Federal Reserve announces a policy change, economic actors will anticipate the long-run results and will move immediately to that equilibrium.
the short-term aspects of public economic policy changes will become mostly ineffective.
all of the above.
A) policymakers will be unable to keep unemployment below the natural rate.
B)when, for example, the Federal Reserve announces a policy change, economic actors will anticipate the long-run results and will move immediately to that equilibrium.
C)the short-term aspects of public economic policy changes will become mostly ineffective.
D)all of the above.
Explanation / Answer
Correct option: (c)
Reason: As per the rational expectation critique of policymaking, policies take long run to show effect and adjustments and are ineffective in the short run.