Rational Expectations Refer to

question 117

Multiple Choice

Rational expectations refer to

• A)the use of all available information in forecasting economic variables.
• B)the use of aggregate supply to forecast unemployment.
• C)the use of opportunity costs to forecast inflation.
• D)disinflation.

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Definitions:

Variable Cost

Variable Cost refers to costs that change in proportion to the level of goods or services that a business produces.

Sales Commissions

Sales commissions are payments made to salespersons for selling products or services, typically a percentage of the sale price.

Chief Financial Officer

A senior executive responsible for managing the financial actions of a company.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in revenues, indicating the extent to which a firm can increase profits by increasing sales.