In the View of Rational Expectations Theory

question 254

Multiple Choice

In the view of rational expectations theory,

• A) people make economic forecasts that are based on insider-outsider relationships and self- fulfilling prophecies.
• B) people form beliefs about future economic outcomes that accurately reflect the likelihood that those outcomes will occur.
• C) people form their expectations on present realities and only gradually change their expectations as experience unfolds.
• D) the economy does not respond quickly to changes in prices, which causes a misallocation of economic resources.

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Definitions:

Net New Equity

The difference between equity capital raised by issuing new shares and the equity capital repurchased or retired over a specific period.

Operating Cash Flow

Funds arising from an enterprise's standard operational processes, demonstrating whether the enterprise can generate adequate positive cash flow to support and increase its activities.

Millions

A numerical unit representing one thousand thousand, or 1,000,000, often used to quantify currency, population, or other large-scale counts.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating short-term financial health and liquidity.