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:

Undue Influence

The situation where an individual is able to influence another’s decisions due to the power or trust placed in them, often leading to unfair outcomes.

Free Will

The capacity of individuals to make choices that are not predetermined by past events, genetics, or environment.

Inflated Price

A price that is considered higher than the product's or service's true value, often due to market dynamics, scarcity, or manipulation.

Undue Influence

An improper or unfair persuasion that compels someone to act against their will, often impacting the validity of contracts and wills.