The proponents of rational expectations believe that: a-there will be a substant

Question

The proponents of rational expectations believe that:

   a-there will be a substantial time lag before people anticipate the eventual effects of a shift to a more expansionary macro-policy.
   b-the inflationary side effects of expansionary policies will be anticipated quickly, and therefore, even their short-run effects on real output and employment will be minimal.
   c-macro-policies that stimulate demand and place upward pressure on the general level if prices will temporarily increase output and employment.
   d-discretionary changes in macro-policy can be made in a manner that will reduce the economic ups and downs of a market economy.

Explanation / Answer

b-the inflationary side effects of expansionary policies will be anticipated quickly, and therefore, even their short-run effects on real output and employment will be minimal

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