An hypothesis that individuals base their expectations on available information and act on that information is called the:
A)irrational forecasts hypothesis.
B)rational information theory hypothesis.
C)rational expectations hypothesis.
D)rational abstention hypothesis.

Question

Quizplus · Accepted Answer

The hypothesis that individuals base their expectations on available information and act on that information is called the rational expectations hypothesis. This means that individuals will use all available information, including past experiences and current economic conditions, to form their expectations about future economic conditions. This hypothesis assumes that individuals are rational and will use all available resources to make informed decisions.

An Hypothesis That Individuals Base Their Expectations on Available Information