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Explain the Difference Between How Adaptive Expectations Are Formed and How

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Essay

Explain the difference between how adaptive expectations are formed and how rational expectations are formed.How does this difference affect the speed at which economic variables are expected to change?


Definitions:

Fight-Or-Flight

A physiological response to perceived harmful events, attacks, or threats to survival, instigating an automatic response in the nervous system to either confront the threat or escape.

Kipling Williams

A researcher known for their work in the fields of psychology, particularly in studying social ostracism and group dynamics.

Sociometer Model

A psychological theory suggesting that self-esteem is a measure of how well individuals perceive they are viewed by others in their social group.

Self-esteem

The perception and evaluation of one's own worth or value.

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