In describing what adaptive expectations means to a friend, you explain that in order to make their economic condition forecasts, agents "Consider only the past and ignore current information". (Option C)
An hypothesized process by which individuals construct their expectations about what will happen in the future based on what has already occurred is known as adaptive expectancies in the field of economics.
For instance, if someone wants to predict the rate of inflation in the future, they may look at historical inflation rates to deduce some trends, and the more years they take into account, the more accurate their prediction would be.
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Full Question:
In describing what adaptive expectations means to a friend, you explain that in order to make their economic condition forecasts, agents?
A) Use both past and current information
B) Consider only current information and ignore the past
C) Consider only the past and ignore current information
