The View That Individuals Weigh All Available Evidence When They

question 106

Multiple Choice

The view that individuals weigh all available evidence when they formulate their expectations about economic events (including information concerning the probable effects of current and future economic policy) is called

• A) the adaptive expectations hypothesis.
• B) the permanent income hypothesis.
• C) the rational expectations hypothesis.
• D) the Phillips curve.

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Definitions:

Retained Earnings

The portion of net earnings not distributed as dividends to shareholders but instead reinvested in the core business or used to pay off debt.

Building Expansion

An increase in the physical size, capacity or significant improvement of a building facility.

Bond Repayments

The process of paying back the principal and interest on bonds, which are forms of long-term debt issued by corporations and governments.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares, rather than cash.