Which theory proposes that people optimally use all available information when forecasting the future?
A) rational expectations
B) perfect expectations
C) momentum expectations
D) policy expectations

Question

Quizplus · Accepted Answer

The theory of rational expectations proposes that people use all available information (including past trends and current economic conditions) to make accurate predictions about the future state of the economy. This theory is based on the assumption that individuals are rational and will adjust their expectations in response to new information or changes in economic conditions.

Which Theory Proposes That People Optimally Use All Available Information