According to the Rational Expectations Hypothesis, Individuals Form Their Expectations

question 118

Multiple Choice

According to the rational expectations hypothesis, individuals form their expectations about future values of economic variables by all of the following EXCEPT

• A) past information.
• B) current information.
• C) their understanding of how the economy operates.
• D) formal macroeconomic theories.

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Definitions:

Stress

A physical, mental, or emotional factor that causes bodily or mental tension and may be a factor in disease causation.

Central

Pertaining to the main or most important parts; often used to describe core functions or areas within a system or body.

Autonomic Nervous System

The part of the nervous system that controls involuntary bodily functions such as heart rate, digestion, and breathing.

Involuntary Muscles

Muscles that operate without conscious control, involved in functions such as heartbeat and digestion.