The theory by which people optimally use all available information when forecasting the future is known as
A)rational expectations.
B)perfect expectations.
C)credible expectations.
D)Predictive expectations.

Question

Quizplus · Accepted Answer

Rational expectations theory asserts that individuals use all available information when forming their expectations about the future. This theory assumes that individuals are rational and make the best possible use of available information, weighing it all equally and adjusting their expectations according to new information. Rational expectations theory is widely used in economics, finance, and other fields to model the behavior of consumers, businesses, and investors.

The Theory by Which People Optimally Use All Available Information