________ holds that people form expectations on the basis of all available information.
A) Stagflation theory
B) The Phillips curve
C) Adaptive expectations theory
D) Rational expectations theory
E) Monetary neutrality

Question

Quizplus · Accepted Answer

Rational expectations theory holds that people form expectations on the basis of all available information, including past experience and current economic conditions. This theory is based on the idea that individuals are rational and forward-looking in their decision-making, and will adjust their expectations accordingly to maximize their utility.

________ Holds That People Form Expectations on the Basis of All