Rational expectations theory suggests that people and firms base their expectations on:
A) the recent past.
B) government announcements.
C) "animal spirits."
D) all available information.

Question

Quizplus · Accepted Answer

Rational expectations theory suggests that people and firms base their expectations on all available information, including past experiences, current economic conditions, and any relevant announcements or data released by the government or other sources. This theory assumes that individuals make decisions based on rational analysis and that they incorporate all available information into their expectations about the future.

Rational Expectations Theory Suggests That People and Firms Base Their