The idea that people make economic decisions using all available past and current information is the basis of
A) the downward-sloping Phillips curve.
B) the adaptive expectations theory.
C) the vertical Phillips curve.
D) the rational expectations theory.
E) supply-side economics.

Question

Quizplus · Accepted Answer

The idea that people make economic decisions using all available past and current information is the basis of the rational expectations theory. This theory assumes that individuals make rational decisions based on their expectations of future events, and therefore, all available information is taken into consideration when making economic decisions.

The Idea That People Make Economic Decisions Using All Available