Rational Expectations Refers to _____

question 36

Multiple Choice

Rational expectations refers to _____.

• A)the theory according to which people optimally use all the information they have, including information about government policies, when forecasting the future.
• B)theory explaining the returns in risky assets
• C)the theory explaining how the government responds to exogenous shocks to the economy.
• D)the theory according to which the central bank establishes the inflation target.

---

Definitions:

Smugglers

Individuals or groups who illegally transport goods across borders to avoid taxes or import/export restrictions.

Slave Trade

The historical trade in which human beings were bought and sold as property, primarily seen in the transatlantic trading systems between the 16th and 19th centuries.

Commercial Ties

The economic and business relationships between companies, industries, or countries.