Question

If firms and households form their expectations about inflation by looking at past inflation, this form of expectations formation is known as ________ expectations. Question 41 options: A) perfect B) adaptive C) forward-looking D) rational

Answer 1

Answer:

B) adaptive

Explanation:

Based on the scenario being described it can be said that this form of expectations formation is known as adaptive expectations. These are expectations formed from a process in which individuals predict what will most likely occur in the future based on the data of what has already happened in the past.