When people use all the relevant data and principles of economics to forecast inflation, they are making
A)an always accurate forecast.
B)what is called a "data-based forecast."
C)what is called a "rational expectation."
D)a mistake.
E)an exaggerated forecast.

Question

Quizplus · Accepted Answer

Rational expectations refer to the assumption that people use all available information, including economic theories and data, to make forecasts about economic variables like inflation.

When People Use All the Relevant Data and Principles of Economics