The theory of rational expectations concludes that

A) the public's expectations can influence the outcome of monetary policy,but not of fiscal policy.
B) the public's expectations can influence the outcome of fiscal policy,but not of monetary policy.
C) the public's expectations as to the effects of economic policies will tend to reinforce the effectiveness of those policies.
D) by reacting in its self-interest to the expected effects of stabilization policy,the public will tend to negate the impact of those policies.

The theory of rational expectations suggests that individuals will adjust their behavior based on their expectations of how government policies will affect the economy. This means that if individuals expect a particular policy to result in inflation or recession, for example, they will take steps to protect themselves from these outcomes, which can potentially offset the intended effects of the policy. Therefore, rational expectations theory suggests that policy interventions are unlikely to have a significant impact on the economy unless they manage to alter individuals' expectations in a significant way.