Answer:
A. Real GDP will increase by the value of the multiplier
Explanation:
The theory of rational expectations states that people make decisions based on previous experiences, available information and how logical a choice seems.
Real Gross Domestic Product (GDP) is the total output an economy produces in a year, that has been adjusted for inflation.
Advocates of rational expectations believe that if consumers expect interest rates to increase, this will lead to an increase in real GDP by the value of the multiplier.
