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.

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Definitions:

Concentration Ratio

A measure of the total output produced in an industry by a given number of firms, usually the largest in the industry, indicating the degree of market concentration.

Herfindahl-Hirschman Index

A measure used to calculate the level of competition within an industry, represented by the sum of the squares of the market shares of all firms in the industry.

Japanese Companies

Entities based in Japan, engaged in commercial, industrial, or professional activities.

Oligopolized Industry

A market structure characterized by a few firms that have significant control over market prices and competition.