Question

If inflation rate is observed as 1% in 2019, a person who anticipants that inflation rate...

If inflation rate is observed as 1% in 2019, a person who anticipants that inflation rate will be also 1% in 2020 has ____.

A.

No expectation
B.

Rational expectation
C.

Normal expectation
D.

Adaptive expectation
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Answer #1

This is not a normal expectation because people don't expect usually without considering anything and it is also no expectation because there is actually an expectation that is taking place for the future and it is also not rational expectation because they are not considering the factors of what causes inflation and how the market is moving etc.

Therefore (a,b,c) is the answer

this is adaptive expectations because based on the past data of 2019 they are expecting the future inflation rate of 2020 and that is the reason why adaptive expectation is apt

Therefore (d) is the answer to this question

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