The Major Criticism of the View That Expectations Are Formed

question 31

Multiple Choice

The major criticism of the view that expectations are formed adaptively is that

• A)this view ignores that people use more information than just past data to form their expectations.
• B)it is easier to model adaptive expectations than it is to model rational expectations.
• C)adaptive expectations models have no predictive power.
• D)people are irrational and therefore never learn from past mistakes.

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Definitions:

Contamination

The presence of unwanted substances or impurities in a material or environment, often leading to pollution or infection.

Floor

The bottom surface of any room or vehicle, on which one may walk or stand.

Service Contract

A contract that covers services for equipment that are not included in a standard maintenance contract.

Parts Replacement

The process of substituting a damaged or worn-out component of a machine or system with a new one to ensure functionality.