The Law Dictionary

Featuring Black’s Law Dictionary Free Online Legal Dictionary 2nd Ed.

What is THEORY OF RATIONAL EXPECTATIONS (TRE)

Observation of economic behaviour where (1) Future conditions can be predicted quite accurately by people without knowing all of the cause and effect relationships. Expectations are constructed rationally and are often right. (2) A person’s response is based on anticipation of a governments action to restrain or stimulate the economy.

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