Expectations are taken to be rational in ________.
A)traditional Keynesian and new Keynesian theory
B)new Keynesian and real business cycle theory
C)real business cycle and traditional Keynesian theory
D)traditional Keynesian,new Keynesian and real business cycle theory

Question

Quizplus · Accepted Answer

Expectations are taken to be rational in both new Keynesian and real business cycle theory, as these models incorporate forward-looking elements and the assumption that agents use all available information efficiently.

Expectations Are Taken to Be Rational in ________