Final answer:
The correct answer is option d. rational expectations. New classical economists build their theories on rational expectations, suggesting that well-informed individuals and firms make quick adjustments in the economy.
Step-by-step explanation:
New classical economists base their theories on the belief that individuals and firms have rational expectations, meaning they make the most accurate forecasts about the future using all available information. This contrasts with adaptive expectations, where expectations are based on past events and information is adapted slowly over time. According to the rational expectations theory, economic participants are well informed about economic events and the functioning of the economy, which leads to rapid adjustments in wages, prices, and overall market equilibrium.
New classical economists build their theories upon the assumption of rational expectations. Rational expectations theory states that people form the most accurate possible expectations about the future using all available information. It assumes that individuals are well-informed about economic events and how the economy works, leading to quick economic adjustments.