According to the Theory of Rational Expectations, People

question 43

Multiple Choice

According to the theory of rational expectations, people:

• A) use only past inflation rates when following expectations of future inflation rates
• B) always forecast inflation correctly
• C) optimally use all information they have when forecasting future inflation rates
• D) both A and B
• E) both B and C

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Definitions:

Sherman Act

A foundational antitrust law in the United States that prohibits monopolies, attempts to monopolize, and other practices that restrain interstate commerce and trade.

Monopoly Power

The ability of a monopoly to dictate what takes place in a given market.

Antitrust Violation

An offense under laws intended to protect trade and commerce from abusive practices such as monopoly, restraint of trade, and unfair business practices.

Social Media Site

A website or platform that enables users to create and share content or participate in social networking.