Predictions based on rational expectations are always correct.

Question

Quizplus · Accepted Answer

Rational expectations are based on the assumption that individuals make predictions based on all available information and past experience. While these predictions may be more accurate than those made by individuals with incomplete information or limited experience, they are not guaranteed to be correct 100% of the time. Unexpected events or changes in circumstances can lead to unforeseen outcomes, making it impossible for even rational expectations to predict the future with complete accuracy.

Predictions Based on Rational Expectations Are Always Correct