Assertion (A) : if expectations are rational an equilibrium can be reached almost at once.
Reason (R) : economic agents observe events over time and make calculation about the future and act directly on that calculation.
In reference to the theory of rational expectation, choose the correct option regarding the assertion and reason given above.
1
Both (A) and (R) are true, but (R) does not explain (A)
2
Both (A) and (R) are true and (R) explains (A)
3
(A) is true and (R) is false
4
(A) is false and (R) is false