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.
A
You might also like to view...
Which of the following is likely to happen due to quantitative easing by the Fed?
A) A rightward shift of the demand curve for bank reserves B) A leftward shift of the supply curve of bank reserves C) A leftward shift of the demand curve for bank reserves D) A rightward shift of the supply curve of bank reserves
Disinflation refers to
A) a rapid increase in the price level. B) a decrease in the price level. C) a reduction in the rate of inflation. D) an increase in the rate of inflation.