Which of the Following Would Be a Violation of the Rational

question 23

Multiple Choice

Which of the following would be a violation of the rational expectations assumption?

• A)"Over the past twenty years, people have consistently under-predicted the inflation rate for the following year."
• B)"Over the past twenty years, people have never once accurately predicted the inflation rate for the following year."
• C)"The Fed's announcement that it might ease interest rates caused an immediate drop in short-term rates, even before the Fed took any action."
• D)all of the above
• E) none of the above