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Author Question: Compare the following three ways to model expectations: animal spirits, adaptive expectations, and ... (Read 73 times)

meagbuch

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on: Jun 30, 2018
Compare the following three ways to model expectations: animal spirits, adaptive expectations, and rational expectations.
 
  What will be an ideal response?

Question 2

The capital ratio is the ratio of a bank's
 
  A) assets divided by its liabilities.
  B) income divided by its assets.
  C) capital divided by its assets.
  D) capital divided by its total liabilities.


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juwms

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Reply #1 on: Jun 30, 2018
Answer to Question 1

Animal spirits assumed that expectations were simply random. Adaptive expectations assumed that individuals formed expectations by looking at past changes in a variable. Rational expectations assumed that individuals form expectations by using all currently available information and an understanding of the model and policy.

Answer to Question 2

C


meagbuch

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Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

ricroger

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Reply 3 on: Yesterday
:D TYSM

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