A Prediction Based on Rational Expectations ________

question 78

Multiple Choice

A prediction based on rational expectations ________.

• A)relies solely on past experience
• B)will always be superior to one based on adaptive expectations
• C)is based on real,rather than nominal variables
• D)will not always be accurate

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Definitions:

Keynesian

Pertaining to the economic theories and policies of John Maynard Keynes, emphasizing the role of government intervention to ensure full employment and stable economies.

Classical

Pertaining to the school of economic thought that emphasizes free markets, free trade, and the idea that economies self-regulate through supply and demand.

John Maynard Keynes

A British economist whose theories on the influences of macroeconomic factors on economic output and government interventions shaped modern economics.

Savings

The portion of disposable income not spent on current consumption but set aside for future use, often in a deposit account or as investments.