According to Rational Expectations, ________

question 81

Multiple Choice

According to rational expectations, ________.

• A) expectations of inflation are viewed as being an average of past inflation rates
• B) expectations of inflation are viewed as being an average of expected future inflation rates
• C) expectations formation indicates that changes in expectations occur slowly over time as past data change
• D) expectations will not differ from optimal forecasts that use all available information

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Definitions:

Straight Line

A geometric concept representing the shortest distance between two points in a plane, characterized by constant direction and an infinite number of points.

Opportunity Cost

The expense incurred by not choosing the second-best option available when a decision is made.

Sweaters

Clothing items made of wool or similar yarns, designed to provide warmth by covering the upper body.

Hats

A type of headwear that comes in various shapes, sizes, and materials, often used for fashion, protection, or ceremonial purposes.