The microeconomic view of the expectations of inflation are based on the assumption that
A) individuals are rational, forward-looking people.
B) individuals will merely guess at what the inflation rate will be.
C) people always assume that inflation will be zero.
D) individuals are highly sophisticated in their economic thinking.

Question

Quizplus · Accepted Answer

The microeconomic view of inflation expectations assumes that individuals are rational and forward-looking, meaning they consider past, current, and future economic conditions when making decisions about spending and saving. This assumption is fundamental to the theory of rational expectations, which is a cornerstone of microeconomics. The other options, including B, C, and D, do not accurately reflect this assumption.

The Microeconomic View of the Expectations of Inflation Are Based