Author Question: According to the rational expectations theory, if all firms have rational expectations and wages and ... (Read 113 times)

Pineappleeh · **on:** Apr 19, 2019

Question 1

If relevant information can be obtained at no cost, people are ________ when they fail to use all available information given that there are usually ________ to making a wrong forecast.

◦ behaving rationally; costs
◦ behaving rationally; no costs
◦ not behaving rationally; costs
◦ not behaving rationally; no costs

Question 2

According to the rational expectations theory, if all firms have rational expectations and wages and prices are flexible, disequilibrium in a market

◦ will never exist.
◦ will only exist in times of high inflation.
◦ will only be temporary.
◦ will be a common occurrence.

cloudre37 · **Reply #1 on:** Apr 19, 2019

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