The rational expectations hypothesis is a theory that states that O individuals can predict the future perfectly, at least with respect to macroeconomic variables like the interest rate and inflation. O people make their economic plans by using all available past and present information and their understanding about how the economy operates. O people make their economic plans in an irrational, intuitive manner. O people make their economic plans by relying on the policy statements made by the President and by leaders in Congress.

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