Economics (M.Phil./Ph.D.) 2022 Panjab University Entrance Exam With Answers

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5.

Rational Expectations Hypothesis suggests that the forecasts that people make:

A: Consistently overestimate the actual rate of inflation in future
B: Are always correct
C: Consistently underestimate the actual rate of inflation in future
D: Are correct on average but are subject to errors that are distributed randomly

The answer is: D

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