Question

If individuals forecast future prices by examining the rates of inflationof the present and recent past, they are using:
a. adaptive expectations
b. rational expectations
c. inflationary
d. structural expectations

Answer 1

Answer:

a. adaptive expectations

Explanation:

When we say someone is using adaptive expectations, it means that they are using past events or experiences in order to predict future behaviors or trends. This methodology is commonly used to predict inflationary rates and how they affect the prices of assets in the future. Generally people will believe that past events will tend to repeat themselves in the future.