Most Economists Believe That the Theory of Rational Expectations Is

question 69

Multiple Choice

Most economists believe that the theory of rational expectations is

• A)more correct in the long run than the short run.
• B)more correct in the short run than the long run.
• C)correct in both the long run and short run.
• D)incorrect because it is based on false logic.

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Definitions:

Arithmetic Average

The sum of a set of numbers divided by the count of that set of numbers, commonly used to compute simple averages.

Historical Annual Average

An average value calculated from a series of yearly figures, often used in financial analysis to smooth out fluctuations.

Holding-Period Return

Holding-period return is the total return received from holding an asset or portfolio of assets over a specified period, including interest, dividends, and capital gains.

Dividend

A portion of a company's earnings that is distributed to shareholders, usually in the form of cash or additional shares.