A Rational Expectation Is

question 17

Multiple Choice

A rational expectation is

• A) a correct forecast but it might not be the best available forecast.
• B) an incorrect forecast.
• C) not necessarily correct but is the best available forecast.
• D) necessarily correct because it is the best available forecast.

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Definitions:

Financial Institutions

Organizations that provide financial services, including banks, insurance companies, and investment firms.

Financial Markets

Financial institutions through which savers can directly provide funds to borrowers

Investment

The allocation of resources, often money, in the hope of generating an income or profit.

Real GDP

The measure of a country's gross domestic product adjusted for inflation, reflecting the value of all goods and services produced at constant prices.