If you believe that expectations react slowly, you are likely
A)a believer in rational expectations.
B)a Keynesian.
C)a theoretical economist.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

This is a characteristic of Keynesian economics, which holds that expectations can be slow to adjust and can have a significant impact on economic behavior. Rational expectations theory, on the other hand, holds that expectations are generally quickly incorporated into economic decision-making. The term "theoretical economist" is too broad and could apply to multiple economic schools of thought.

If You Believe That Expectations React Slowly, You Are Likely