The 'rational expectations' hypothesis assumes people: MCQ with Answer and Explanation

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The 'rational expectations' hypothesis assumes people:

A. ignore information

B. use all available information to form expectations

C. only use past values

D. have no expectations

Answer: Option B

Solution (By JKSSB Mock Tests)

Rational expectations assumes agents use all available information efficiently.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'disinflation' refers to:

A. a fall in GDP

B. a fall in the price level

C. a decrease in the rate of inflation

D. an increase in inflation

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Correct Answer: Option C

Explanation:
Disinflation is a slowdown in the rate of inflation.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'World Economic Forum' was established in which year?

A. 1990

B. 1971

C. 1965

D. 1980

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Correct Answer: Option B

Explanation:
WEF was established in 1971.

This question belongs to: Economy GK Economy Set 1

Question #3

The concept of 'Framing Effects' demonstrates that:

A. Only the objective outcomes matter

B. The way in which a choice is presented can systematically affect decisions even when the underlying outcomes are identical

C. Preferences are completely invariant to description

D. Framing never affects choices

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Correct Answer: Option B

Explanation:
Framing effects occur when logically equivalent descriptions of the same decision problem lead to different choices, violating the invariance assumption of standard rational-choice theory.

This question belongs to: Economy GK Economy Set 1

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