According to the rational expectations school,people base their expectations about inflation on:
A)the announcement of a change in policy.
B)weighted averages of previous inflation rates,with the most distant getting the heaviest weight.
C)all information available to them.
D)changes in monetary policy only.
E)changes in both monetary and fiscal policy.

Question

Quizplus · Accepted Answer

According to the rational expectations school, people base their expectations about inflation on all information available to them. This includes both economic data and policy announcements, as well as any other relevant information that may affect inflation. Weighted averaging of past inflation rates is one possible method for forming expectations, but it is not the only or most important factor.

According to the Rational Expectations School,people Base Their Expectations About