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When people form expectations using only past information, we say that they have _________________ expectations. rational...

When people form expectations using only past information, we say that they have _________________ expectations.

rational

adaptive

past-looking

all of the above

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Answer #1

Option B.

  • When people form expectations using only past information, we say that they have adaptive expectation.
  • People are said to have adaptive expectations only if they take all major decisions based on the past information available to them.
  • That is they base their future decisions on the past information to which they have already adapted.
  • While rational expections is said to be formed when people take decisions based on rationality, available information and past experiences.
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