The Rational Expectations Hypothesis Suggests That

Multiple Choice

The rational expectations hypothesis suggests that

A) people are creatures of habit and tend not to change their economic behavior in the short run.
B) people are rational if they make forecasts about economic activity.
C) people use all available information to make forecasts about future economic activity and adjust their behavior to these forecasts.
D) people use all available information to make forecasts about future economic activity but often fail to adjust their behavior to these forecasts.