According to the Rational Expectations Theory, interest rates follow predictable patterns that can be used to earn excess profits.

Name: According to the Rational Expectations Theory, interest rates follow predictable patterns that can be used to earn excess profits.
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Question

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Rational Expectations Theory suggests that individuals use all available information efficiently to forecast future economic variables, making it difficult to consistently earn excess profits from predictable patterns in interest rates.

According to the Rational Expectations Theory, Interest Rates Follow Predictable