Before developing inflation expectations,Jenny reads through all available material on consumer price indexes and producer price indexes.Later,she also reads through recent magazines and newspapers to identify factors that could affect the inflation rate in the coming days.Jenny can be said to have ________.
A) adaptive expectations
B) rational expectations
C) marginal expectations
D) conditional expectations

Question

Quizplus · Accepted Answer

Jenny's process of reviewing available information and analyzing potential factors to develop inflation expectations is consistent with the tenets of rational expectations theory. This theory posits that individuals use all available information to form expectations about future economic events. The other options (adaptive expectations, marginal expectations, and conditional expectations) do not accurately describe the process that Jenny is undertaking.

Before Developing Inflation Expectations,Jenny Reads Through All Available Material on Consumer