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Any test of the rational expectations hypothesis must show that expectations are formed rationally and

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Any test of the rational expectations hypothesis must show that expectations are formed rationally and

Question 1.

A problem with comparing macroeconomic models is that

▸ people may change how they react when economic policies are changed.

▸ macroeconomic models do not predict the same outcomes from policies.

▸ macroeconomic models cannot be expressed in mathematical terms.

▸ macroeconomic models must meet government standards for uniformity.

Question 2.

Any test of the rational expectations hypothesis must show that expectations are formed rationally and

▸ the model being used is the true model.

▸ the velocity of money is constant.

▸ there are no price surprises.

▸ all policy changes are anticipated.

Textbook

Principles of Economics

Edition: 12^th

Authors: Case, Fair, Oster

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joanamet

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More solutions for this book are available here

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