What does it mean to say that workers and firms have rational ...

[geodog55]

What does it mean to say that workers and firms have rational expectations?
 
  What will be an ideal response?

Question 2

The aggregate demand curve shows the relationship between the price level and the level of planned aggregate expenditure in the economy.
 
  Indicate whether the statement is true or false

[jessofishing]

Answer to Question 1

Rational expectations means that workers and firms form current expectations using not only information from the past, but all available information. In forming expectations of inflation, rational expectations means that workers and firms use information on recent inflation rates, but also other information, such as the knowledge of the Fed's current monetary policy.

Answer to Question 2

TRUE

[geodog55]

Thank you

[jessofishing]

No problemo