According to the Rational Expectations Theory, People Base Their Expectations

question 87

Multiple Choice

According to the rational expectations theory, people base their expectations about inflation on _____

• A) the announcement of a change in policy.
• B) weighted averages of previous inflation rates, with the most distant getting the heaviest weight.
• C) all information available to them.
• D) changes in monetary policy only.
• E) changes in both monetary and fiscal policy.

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Definitions:

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