A prediction based on rational expectations ________.
A)relies solely on past experience
B)will always be superior to one based on adaptive expectations
C)is based on real,rather than nominal variables
D)will not always be accurate

Question

Quizplus · Accepted Answer

Rational expectations are based on the assumption that individuals use all available information, including past experience, to form their expectations of future events. However, this does not guarantee that their predictions will always be accurate. Market conditions can change rapidly, and unforeseen events can impact expectations. Therefore, while rational expectations may be more accurate overall, they are not infallible.

A Prediction Based on Rational Expectations ________