Which of the Following Would Be a Violation of the Rational

Multiple Choice

Which of the following would be a violation of the rational expectations assumption?

A) "Over the past twenty years, people have consistently over- predicted the inflation rate for the following year."
B) "Over the past twenty years, people have never once accurately predicted the inflation rate for the following year."
C) "The RBA's announcement that it might ease interest rates caused an immediate decrease in short- term rates, even before the RBA took any action."
D) Both A and B.
E) Both A and C.