If people take into account the expected behavior of fiscal and monetary authorities in forecasting the behavior of inflation rates,they are most likely forming their projections using

A) behavioral expectations.
B) adaptive expectations.
C) contractionary expectations.
D) inflationary expectations.
E) rational expectations.

Rational Expectations

The hypothesis that individuals and firms use all available information to make economic decisions and forecasts, impacting market outcomes.

Fiscal Authorities

Government bodies responsible for managing a country's economic policy, particularly regarding taxation and government spending.

Monetary Authorities

Institutions responsible for regulating a country's money supply and financial policies, such as central banks.