According to the rational expectations hypothesis, individuals form their expectations about future values of economic variables by all of the following EXCEPT

Question

Quizplus · Accepted Answer

The rational expectations hypothesis suggests that individuals base their future expectations on past and current information as well as their understanding of how the economy works, but not necessarily on formal models of macroeconomics. In fact, the hypothesis assumes that individuals have a broader understanding of the economy than is captured by any formal model.

According to the Rational Expectations Hypothesis, Individuals Form Their Expectations