The Theory of Rational Expectations Is the Theory That Expectations

question 61

Multiple Choice

The theory of rational expectations is the theory that expectations will on average be equal to

• A)optimal forecasts.
• B)adaptive expectations.
• C)market changes.
• D)actual values.

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Definitions:

Standard Cost

A predetermined cost of manufacturing an item, including direct materials, labor, and overheads, used for budgeting and performance evaluation.

Overhead Cost Performance Report

A document that compares the actual overhead costs incurred to the budgeted or standard overhead costs, for the purpose of monitoring and controlling these costs.

Efficiency Variances

Variances that occur when the actual performance deviates from the expected standards, often analyzed in terms of time, cost, and materials.

Budget Variance

The difference between budgeted figures for revenue and expenditure, and the actual amounts realized.