Which of the Following Would Be a Violation of the Rational

question 51

Multiple Choice

Which of the following would be a violation of the rational expectations assumption?

• A) "Over the past twenty years, people have consistently over- predicted the inflation rate for the following year."
• B) "Over the past twenty years, people have never once accurately predicted the inflation rate for the following year."
• C) "The RBA's announcement that it might ease interest rates caused an immediate decrease in short- term rates, even before the RBA took any action."
• D) Both A and B.
• E) Both A and C.

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Definitions:

External Behavior

Observable actions or responses of an individual in interaction with the environment or outside stimuli, distinct from internal cognitive processes.

Political Tactics

Strategies and maneuvers used within an organization to gain advantage or support in order to achieve specific goals or objectives.

Conducting Market Research

is the process of gathering, analyzing, and interpreting information about a market, including its trends, competitors, and consumers, to inform business decisions.

External Monitoring

involves systematically observing and analyzing external environmental factors that may affect an organization's performance, enabling it to adapt or prepare strategically.