When people use all the relevant data and principles of economics to forecast inflation, they are making
A) a mistake.
B) what is called a "rational expectation."
C) an exaggerated forecast.
D) an always accurate forecast.
E) what is called a "data-based forecast."

Question

Quizplus · Accepted Answer

Using all the relevant data and principles of economics to forecast inflation is also known as a "rational expectation", which is considered a valid method of forecasting. This method involves collecting information about all the relevant factors that could impact inflation and analyzing them systematically to arrive at a forecast. While it is not always accurate, it is a more reliable method than basing forecasts on incomplete or unreliable information.

When People Use All the Relevant Data and Principles of Economics