Rational Expectations Are Forecasts

question 7

Multiple Choice

Rational expectations are forecasts

• A)that, while not necessarily correct, are the best that can be made given the available data.
• B)that are technically correct.
• C)that accurately predict the short-term trade-off between inflation and unemployment.
• D)made by economists using the most sophisticated econometric models.

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Net Credit Sales

The total revenue from sales made on credit, minus any returns or allowances.

Times Interest Earned

Times interest earned, a financial metric, measures a company's ability to meet its interest payments on outstanding debt with its before-tax income.

Income before Income Taxes

Income before income taxes is a financial measure that represents a company's earnings before tax expenses have been deducted.