Rational Expectations Involve

question 6

Multiple Choice

Rational expectations involve:

• A)​forecasts that are technically correct.
• B)​forecasts that, while not necessarily correct, are the best that can be made given the available data.
• C)​forecasts that accurately predict the short-term future for wages and prices.
• D)​forecasts made by economists based on sophisticated econometric models.

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Definitions:

Acid-Test Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities with quick assets (cash, marketable securities, and accounts receivable).

Company

A business entity established by a collection of people to conduct and manage a commercial venture.

Dividend Yield Ratio

A financial ratio that indicates how much a company pays out in dividends each year relative to its share price.

Total Dividend

The total amount of dividend that a company decides to pay out to its shareholders from its net income.