The Adaptive Expectations Hypothesis Implies That People

question 86

Multiple Choice

The adaptive expectations hypothesis implies that people

• A) adjust their expectations quickly to policy changes.
• B) expect the next period to be pretty much like the recent past.
• C) will always be correct in their forecast for the next period.
• D) change their expectations about the future if policy changes.

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Definitions:

Easement By Necessity

A type of easement granted by law when it is necessary for reasonable use of a property, commonly for access to landlocked property.

Adverse Possession

An involuntary property transfer in which a person acquires ownership of property by treating a piece of real property as his or her own, without protest or permission from the owner.

Easements

A right granted to a person or entity to use a portion of another’s property for a specific purpose, without owning it.

Profits

The financial gain made in a transaction or operation after all expenses are subtracted from revenue.