The Rational-Expectations Hypothesis Suggests That Errors in Forecasting Future Inflation

Multiple Choice

The rational-expectations hypothesis suggests that errors in forecasting future inflation rates are due to

A) random, unpredictable events.
B) the fact that people assume that the current inflation rate will continue into the future.
C) the fact that people consistently underestimate future inflation.
D) the fact that people consistently overestimate future inflation.