A rational expectation is
A) a forecast which perfectly foretells the future.
B) a forecast devoid of all emotions.
C) the best possible forecast based upon all relevant information.
D) the forecast that automatically carries over from past forecasts.

Question

Quizplus · Accepted Answer

A rational expectation is the best possible forecast based upon all relevant information. It takes into account all available information and uses it to make the most accurate forecast possible. It is not necessarily a perfect or emotionless forecast, but rather one that is based on rational analysis and evaluation of all available data.

A Rational Expectation Is