According to rational expectations theory,?

Question

a) there is absolutely nothing gov can do even in the short run, to reduce the unemployment rate

b)the gov can use fiscal policy such as increased gov spending or lower tax rates to reduce unemployment

c) a modern extension of keynesian economics exist

d)discretionaly fiscal policy is essential for prolonged growth

e)market participants can be fooled in the long run by monetary and fiscal policy rules.

Answer 1

i think its B

http://en.wikipedia.org/wiki/Rational_ex...

Answer 2

See

http://books.google.com/books?id=NNRU3b_...

for the answer