According to the Adaptive Expectations Hypothesis

question 102

Multiple Choice

According to the adaptive expectations hypothesis,

• A) inflation will cause the long-run unemployment rate to decline.
• B) the economic record during the current period strongly influences decision-maker expectations about the future.
• C) decision makers will consider the expected impact of policy changes when forming their expectations about the future rate of inflation.
• D) future inflation will adapt to conform with the expectations of decision makers.

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Definitions:

Marketplace Trends

Observations of general directions in which markets move, influenced by consumer behavior, technological advancements, and economic factors.

Prediscussion Polling

The practice of gauging opinions or attitudes of individuals before a discussion or meeting takes place.

Common Information Effect

The tendency for group members to focus on information that all members share, often at the expense of unique information held by individual members.

Discussion

A process in which individuals exchange ideas, opinions, or information through spoken or written communication.