If managers use strong macroeconomic knowledge and good forecasts to build their inflation expectations, they have _____ expectations.
A)adaptive
B)anchored
C)aero
D)rational

Question

Quizplus · Accepted Answer

Rational expectations rely on using all available information, including macroeconomic knowledge and forecasts, to form expectations. This is in contrast to adaptive expectations, which rely solely on past trends or observations, and anchored expectations, which are fixed to a certain value or target. Aero expectations are not a recognized concept in economics.

If Managers Use Strong Macroeconomic Knowledge and Good Forecasts to Build