When using rational expectations,forecast errors will,on average,be ________ and ________ be predicted ahead of time.
A)positive;can
B)positive;cannot
C)negative;can
D)zero;cannot

Question

Quizplus · Accepted Answer

Rational expectations assume that individuals base their expectations on all available information and use the best possible forecasting techniques. Therefore, forecast errors will, on average, be zero as individuals make predictions that are consistent with actual outcomes. However, it does not mean that all predictions will be correct as there may be unforeseeable events that will cause unpredictability. So, the correct answer is D (zero; cannot).

When Using Rational Expectations,forecast Errors Will,on Average,be ________ and ________

When Using Rational Expectations,forecast Errors Will,on Average,be and