Answer-The Lucas Critique asserts _______

The Lucas Critique asserts that historical relationships between variables become irrelevant once economic policies change. It argues that economic models relying solely on past data fail to account for how individuals expectations and behavior change in response to new policies, making such models unreliable for policy evaluation.

Question

The Lucas Critique asserts

_______

A that economic models are always accurate in predicting future outcomes regardless of policy changes.

B that historical relationships between variables become irrelevant once economic policies change.

C that policymakers should always rely on past economic data without considering future expectations.

D that rational expectations have no impact on the effectiveness of new economic policies.

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The Lucas Critique asserts

Solution