Which of the following statements is true regarding Rational Expectations and policy?
- Rational expectations reduce the effectiveness of anticipated monetary policy.
- Individuals and firms adjust their behavior based on expected policy outcomes.
- Only unanticipated policy changes can have an effect on real output.
1
Only 1 is correct
2
Only 2 is correct
3
Both 1 and 2 are correct
4
All statements are correct
5
Question Not Attempted