If Expectations Are Formed Adaptively,then People

question 5

Multiple Choice

If expectations are formed adaptively,then people

• A)use more information than just past data on a single variable to form their expectations of that variable.
• B)often change their expectations quickly when faced with new information.
• C)use only the information from past data on a single variable to form their expectations of that variable.
• D)never change their expectations once they have been made.

---

Definitions:

Optimal Allocation

The most efficient distribution of resources and production that maximizes the benefits or profits within an economy or specific market.

Government Intervention

Regulatory actions taken by a government to affect or influence a specific sector of its economy, often to correct market failures or promote social welfare.

Allocative Efficiency

Refers to a market situation where resources are apportioned in the most efficient manner, allowing for the optimal combination of goods and services production to meet consumer preferences.

Consumer Surplus

The variance between the aggregate sum consumers are prepared and capable of spending for a product or service and the aggregate sum they end up paying.