Economic agents have an incentive to formulate expectations rationally
A) because ignoring information is usually costly.
B) to increase prices.
C) to reduce wages.
D) to ensure that all expectations are realized.

Question

Quizplus · Accepted Answer

Ignoring information can result in making unwise decisions that can be costly for economic agents. Rational expectations help economic agents make informed decisions based on available information and reduce the likelihood of making costly mistakes.

Economic Agents Have an Incentive to Formulate Expectations Rationally