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Explain the Difference Between How Adaptive Expectations Are Formed and How

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Essay

Explain the difference between how adaptive expectations are formed and how rational expectations are formed.How does this difference affect the speed at which economic variables are expected to change?


Definitions:

Franchisor

A business entity that grants the right to an individual or group to carry out commercial activities using its trademark and business model in exchange for a fee or royalty.

Franchisee

The seller of goods or services under a trade name or trademark in a franchise.

Trade Name

The name by which a business is known to the public, differing from its legal name, under which it carries out its business activities.

Franchisor

The party in a franchising agreement that owns the overarching company, trademarks, and products, granting the right to operate a franchise.

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