Rational expectations are more accurate than adaptive expectations,________.
A)on average
B)always
C)because they require less information
D)except when policies have changed

Question

Quizplus · Accepted Answer

Rational expectations are considered more accurate on average because they incorporate all available information, including the understanding of how economies work, to predict future events. Unlike adaptive expectations, which rely on past trends to forecast the future, rational expectations adjust for new information and anticipate changes, making them more accurate on average.

Rational Expectations Are More Accurate Than Adaptive Expectations,________