In the rational expectations theory, a temporary change in real output could result from:
A) Anticipated price-level changes
B) A price-level surprise
C) A coordination failure
D) Insider-outsider relationships

Question

Quizplus · Accepted Answer

According to rational expectations theory, individuals make decisions based on all available information, including their expectations about future events. If there is a surprise change in the price level, individuals' expectations may need to adjust, leading to a temporary change in real output. The other choices are not related to the rational expectations theory.

In the Rational Expectations Theory, a Temporary Change in Real