The Assumption of Rational Expectations for Inflation Means That People

Multiple Choice

The assumption of rational expectations for inflation means that people will form their expectations of inflation by:

A) optimally using all available information, including information about current policies, to forecast the future.
B) asking the opinions of the best experts.
C) subscribing to the forecasting service that uses the best econometric model.
D) basing their opinions on recently observed inflation.