Multiple Choice
Which of the following statements best describes the rational expectations hypothesis?
A) Individuals will not enter into long-term agreements unless they are certain about the payments they will receive.
B) It is likely that individuals will consistently make errors.
C) Individuals will make random errors,independent of previous errors.
D) It is reasonable to expect individuals to consistently underestimate the level of inflation.
Correct Answer:
Verified
Correct Answer:
Verified
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