Suppose that the average growth rate of the economy has been 3 %. Given a forecast of 2 % growth this year, if rational expectations hold, then the expected forecast error is

Answer and Explanation:

Forecast error is a difference between Estimated data and real data, here Estimated data is referred to as forecast data.

According to rational expectations principles, expected forecast error's average always near to be zero.

Expected forecast error may be forecast or predict in future.

So, Expected forecast error will be zero (0%)