What does it mean to say that workers and firms have rational expectations?

What will be an ideal response?


Rational expectations means that workers and firms form current expectations using not only information from the past, but all available information. In forming expectations of inflation, rational expectations means that workers and firms use information on recent inflation rates, but also other information, such as the knowledge of the Fed's current monetary policy.

Economics

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Which barrier to entry is an exclusive right granted to the author or composer of a literary, musical, dramatic or artistic work?

A) patent B) copyright C) public franchise D) government license E) natural barrier

Economics

If the consumption of a good decreases the quantity available for another person, the good is

A) rival. B) excludable. C) pure. D) free.

Economics

An open market purchase, a decrease in the discount rate, and a decrease in the reserve requirement would shift the aggregate demand curve rightward

Indicate whether the statement is true or false

Economics

Real gross domestic product (GDP) increases if

a. current prices increase b. current quantities increase c. current prices are constant d. nominal GDP increases e. nominal GDP decreases

Economics