Question

which view of the macroeconomy suggests that the speed of adjustment Purcell correction would be very quick

Answer 1

Rational expectations theory suggests that the speed of adjustment Purcell correction would be very quick.

What Is Rational Expectations Theory?

The rational expectations theory is a widely used concept and modeling technique in macroeconomics. Individuals make decisions based on three primary factors, according to the theory: their human rationality, the information available to them, and their past experiences.

The rational expectations hypothesis was originally suggested by John (Jack) Muth 1 (1961) to explain how the outcome of a given economic phenomena depends to a certain degree on what agents expect to happen.

• People who have rational expectations always learn from their mistakes.
• Forecasts are unbiased, and people make decisions based on all available information and economic theories.
• People understand how the economy works and how government policies affect macroeconomic variables like the price level, unemployment rate, and aggregate output.

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