The Rational Expectations Hypothesis Is a Theory That States That

Multiple Choice

The rational expectations hypothesis is a theory that states that

A) individuals can predict the future perfectly, at least with respect to macroeconomic variables like the interest rate and inflation.
B) people make their economic plans by using all available past and present information and their understanding about how the economy operates.
C) people make their economic plans in an irrational, intuitive manner.
D) people make their economic plans by relying on the policy statements made by the President and by leaders in Congress.