Anticipations about inflation and how the economy should perform that are formed by households and businesses from their understandings of how they would be affected by proposed government policies are:
A) rational expectations.
B) adaptive expectations.
C) policy-review expectations.
D) experience-adjustment expectations.

Question

Quizplus · Accepted Answer

Rational expectations are anticipations about inflation and economic performance that are formed by individuals and businesses based on their understanding of how proposed government policies will affect them. This theory suggests that entities make forecasts based on all available information, including the potential impact of government actions.

Anticipations About Inflation and How the Economy Should Perform That