The Rational Expectations Hypothesis Assumes That Individuals Will

question 78

Multiple Choice

The rational expectations hypothesis assumes that individuals will

• A) never make forecasting errors.
• B) be as likely to overestimate as to underestimate the future rate of inflation.
• C) continually make systematic forecasting errors.
• D) ignore past forecasting errors when formulating predictions.

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Definitions:

Strategic Plan

A roadmap designed by an organization to outline its goals, strategies, and actions to achieve long-term success and competitive advantage.

Organizational Strategy

A long-term plan formulated by an entity to achieve specific goals and objectives, guiding its direction and allocation of resources.

Performance Standards

Benchmarks or criteria established by businesses or organizations to measure the quality and effectiveness of employee tasks and activities.

Indirect Compensation

Benefits provided by an employer that are not part of direct salary, such as health insurance, retirement plans, and paid leave.