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If Expectations of the Future Inflation Rate Are Formed Solely

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If expectations of the future inflation rate are formed solely on the basis of a weighted average of past inflation rates,then economics would say that expectation formation is


Definitions:

Perceptual Set

A psychological predisposition or readiness to perceive certain features of the environment while ignoring others.

Relative Luminance

A measure of the amount of light that comes from a source or is reflected by a surface, compared to the amount of light coming from a reference source.

Shape Constancy

The perceptual phenomenon by which we recognize objects as having a constant shape despite changes in the angle of vision, distance, and lighting.

Interposition

A visual cue in depth perception where one object partially covers another, suggesting that the covering object is closer to the viewer.

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