If people behave as the rational expectations school thinks they do,one result is that adjustments in real output to monetary and fiscal policy changes are

A) smaller.
B) larger.
C) less predictable.
D) in the opposite direction from that predicted by standard analysis.

Rational Expectations

The hypothesis in economics that individuals form forecasts about the future based on all available information and past experiences in an unbiased and logical manner.

Monetary Policy

The process by which the monetary authority of a country, like the central bank, controls the supply of money, often targeting an inflation rate or interest rate to ensure stability and economic growth.

Fiscal Policy

Government policy regarding taxation and spending that is used to influence the economy, including actions to manage the budget deficit or surplus to achieve economic objectives.