Rational Expectations Assume That Individuals

question 46

Multiple Choice

Rational expectations assume that individuals:

• A) can accurately predict the future.
• B) make predictions based on the past behaviour of the economy.
• C) do not make systematic forecast errors.
• D) have perfect foresight.
• E) form their predictions of macroeconomic variables randomly.

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Definitions:

Schizophrenia

A psychiatric disorder characterized by disruptions in thought processes, perceptions, emotional responsiveness, and social interactions.

Disorganized

Refers to a state where systems, objects, or thoughts lack proper structure or arrangement.

Bizarre Behavior

Unusual or eccentric actions that deviate significantly from societal norms and expectations.

Hallucination

A perceptual experience that occurs in the absence of an external stimulus, often associated with mental disorders.