According to Rational Expectations

question 37

Multiple Choice

According to rational expectations

• A)expectations of inflation are viewed as being an average of past inflation rates.
• B)expectations of inflation are viewed as being an average of expected future inflation rates.
• C)expectations formation indicates that changes in expectations occur slowly over time as past data change.
• D)expectations will not differ from optimal forecasts using all available information.

Calculate and interpret variances in budgeting, including spending, revenue, and operating income variances.

Differentiate between fixed, variable, and mixed costs and their roles in budgeting.

Apply flexible budgeting techniques to adjust budgets according to actual activity levels.

Analyze the impact of activity level changes on budgeted and actual costs.

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