Which of the Following Statements About Expectations Theory Is True

question 125

Multiple Choice

Which of the following statements about expectations theory is true?

• A) Adaptive expectations theory implies that people form expectations on the basis of all available information.
• B) Rational expectations theory implies that people's expectations of future inflation are based on their most recent experience.
• C) Rational expectations theory does not imply that people always predict inflation correctly.
• D) Adaptive expectations theory identifies prediction errors as random.
• E) Rational expectations theory was developed before adaptive expectations theory.

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Definitions:

Capabilities

The skills, resources, and abilities that enable an individual or organization to perform effectively and achieve their goals.

Frequent Job Changes

The practice of changing jobs more often than is typical, which can reflect a variety of career strategies or market conditions.

Employment Gaps

Periods of time when an individual was not employed, which may appear in their work history.

Relevant Experiences

Past activities or jobs that directly relate to the position or task at hand, demonstrating suitability and competence.