A forecast that is based on all the relevant information available is
A)usually no better than a random guess given that the future bears many uncertainties.
B)usually accurate.
C)called a rational expectation.
D)useful only in the prediction of cost-push inflation.
E)useful only in the prediction of demand-pull inflation.

Question

Quizplus · Accepted Answer

A forecast that is based on all the relevant information available is called a rational expectation. This approach is based on the assumption that people make predictions using all available information, including past trends and current economic conditions. While no forecast can be entirely accurate, the rational expectation approach is considered to be the best available prediction method because it takes into account all factors that might affect future outcomes.

A Forecast That Is Based on All the Relevant Information