The rational expectations hypothesis is a theory that states that
A) people make their economic plans by using all available past and present information and their understanding about how the economy operates.
B) individuals can predict the future perfectly, at least with respect to macroeconomic variables like the interest rate and inflation.
C) people make their economic plans in an irrational, intuitive manner.
D) people make their economic plans by relying on the policy statements made by the President and by leaders in Congress.
A
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What factors can start a cost-push inflation? What must the Fed's response be for the inflation to continue?
What will be an ideal response?
With respect to events like global warming some economists suggest using falling discount rates because
A) exponential discounting virtually gives no weight to (large) costs incurred far into the future. B) exponential discounting weights (large) costs incurred far into the future heavily. C) events far in the future do not affect us. D) we should not care about costs far in the future.