An implication of rational expectations is that as new information becomes available market participants (the public) should adjust accordingly. But there is a _____________; the lag is believed to be _________________.

Question

Quizplus · Accepted Answer

The correct answer is that there is a lag in how market participants adjust to new information, but over time, with advancements in technology and better access to information, this lag is believed to be shortening. This means that markets are becoming more efficient at incorporating new information into prices.

An Implication of Rational Expectations Is That as New Information