A rational expectation of the inflation rate is
A)a forecast based on the forecasted actions of the Fed and other relevant determinant factors.
B)an expected inflation rate between 1 percent and 5 percent.
C)a forecast based only on the historical evolution of inflation over the last 100 years.
D)always correct.
E)an expected inflation rate between 5 percent and 10 percent.

Question

Quizplus · Accepted Answer

Rational expectations involve using all available information, including the anticipated actions of the Fed and other relevant factors, to forecast the inflation rate.

A Rational Expectation of the Inflation Rate Is