The Problem with the Traditional Macroeconomic Treatment of Expectations of Inflation

Multiple Choice

The problem with the traditional macroeconomic treatment of expectations of inflation is that

A) the model is not consistent with the microeconomic assumption that individuals are rational, forward-looking people.
B) the model assumes that individuals will merely guess at what the inflation rate will be.
C) in the model people always assume that inflation will be zero.
D) the way people formulate expectations in that model assumes that individuals are highly sophisticated in their economic thinking.