In Which Case Will Adaptive, Extrapolative and Rational Expectations Predict

question 128

Multiple Choice

In which case will adaptive, extrapolative and rational expectations predict the same inflation rate in the coming year?

• A)Inflation is 4 percent last year, 2 percent this year, and the economist's model predicts 3 percent.
• B)Inflation is 4 percent last year, 2 percent this year, and the economist's model predicts 0 percent.
• C)Inflation is 3 percent last year, 2 percent this year, and the economist's model predicts 4.5 percent.
• D)In none of the options would the predictions be the same.

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Definitions:

Behavioral Genetics

The field of study that examines the role of genetic and environmental influences on behaviors.

Gene-environment Correlations

The concept that an individual's (genetically influenced) behaviors and preferences can shape their environment, which in turn impacts their development.

Evolutionary Mismatch

A concept that certain modern behaviors or environmental conditions may not align with those our ancestors evolved to face, potentially leading to negative health outcomes.

Evolutionary Psychology

An approach used in both social and natural sciences that analyzes the psychological framework through the lens of contemporary evolutionary theory.