According to the Macro Rational Expectation (MRE) hypothesis, only the unanticipated macroeconomic policy has impacts on real economic variables, and the anticipated policy changes have no real impacts. This study analyzes the effects of the anticipated and unanticipated components of fiscal policy on the U. S. farm real GNP by testing the neutrality and rationality propositions of the :MRE hypothesis. The test results show that both the rationality and neutrality propositions are rejected. The

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... empirical findings indicate that the anticipated fiscal policy does have significant effects on farm output. Examination of a specific sector sheds light in understanding the nature of the market and in ascertaining the reasons for the cause of the nonneutrality.