The ________________________hypothesizes that expectations will on average be equal to the optimal value.

Name: The ________________________hypothesizes that expectations will on average be equal to the optimal value.
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Question

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The theory of rational expectations asserts that people use all available information, including economic models, to make predictions about the future. It assumes that expectations will be unbiased and on average, equal to the optimal value. Therefore, the correct choice is B.

The ________________________Hypothesizes That Expectations Will on Average Be Equal to the Optimal