A rational expectation is
A) the forecast that automatically carries over from past forecasts.
B) the best possible forecast based upon all relevant information.
C) a forecast devoid of all emotions.
D) a forecast which perfectly foretells the future.

Question

Quizplus · Accepted Answer

A rational expectation is the best possible forecast based upon all relevant information available at the time. It takes into account all available data and factors in current and anticipated economic conditions to make the most accurate prediction. It is not a perfect forecast, but rather the most informed and reasonable one.

A Rational Expectation Is