According to the Rational Expectations Hypothesis, an Individual's Assessment of Future

question 213

Multiple Choice

According to the rational expectations hypothesis, an individual's assessment of future economic performance

• A)does not consider past performance.
• B)does not consider the impact of inflation.
• C)only considers past performance.
• D)considers both past performance and current monetary and fiscal policy.

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Definitions:

Consumer Goods

Products and services that are purchased for personal use or consumption by the general public.

Capital Goods

Goods that are used in producing other goods and services rather than being bought by consumers.

Opportunity Cost

The cost of forgoing the next best alternative when a decision is made to choose one option over another.

Production Possibilities Curve

A graphical representation showing the maximum quantity of goods and services that a society can produce with existing resources and technology, underlining the concept of opportunity cost.