This topic contains a solution. Click here to go to the answer

Author Question: Both adaptive expectations and rational expectations are prone to error (a discrepancy between the ... (Read 89 times)

Frost2351

  • Hero Member
  • *****
  • Posts: 557
Both adaptive expectations and rational expectations are prone to error (a discrepancy between the expectation and the actual experience). In each case, how does error affect the formation of new expectations?
 
  What will be an ideal response?

Question 2

Real interest rates were negative during most of the
 
  A) 1960s.
  B) 1970s.
  C) 1980s.
  D) 1990s.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

AngeliqueG

  • Sr. Member
  • ****
  • Posts: 343
Answer to Question 1

With adaptive expectations, the newest information is considered neither more nor less significant than the oldest available data. Rational expectations augment data with one or more hypotheses regarding the underlying mechanisms. Each new discrepancy is an opportunity to assess the accuracy of the presumed mechanisms. Given all available, relevant information, the latest discrepancy might be dismissed as an anomaly to be ignored when forming subsequent expectations. Or, the discrepancy might prompt a revision of hypotheses, such that new expectations are affected profoundly.

Answer to Question 2

B




Frost2351

  • Member
  • Posts: 557
Reply 2 on: Jun 30, 2018
Wow, this really help


DylanD1323

  • Member
  • Posts: 314
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

The newest statin drug, rosuvastatin, has been called a superstatin because it appears to reduce LDL cholesterol to a greater degree than the other approved statin drugs.

Did you know?

By definition, when a medication is administered intravenously, its bioavailability is 100%.

Did you know?

Warfarin was developed as a consequence of the study of a strange bleeding disorder that suddenly occurred in cattle on the northern prairies of the United States in the early 1900s.

Did you know?

The first oncogene was discovered in 1970 and was termed SRC (pronounced "SARK").

Did you know?

For about 100 years, scientists thought that peptic ulcers were caused by stress, spicy food, and alcohol. Later, researchers added stomach acid to the list of causes and began treating ulcers with antacids. Now it is known that peptic ulcers are predominantly caused by Helicobacter pylori, a spiral-shaped bacterium that normally exist in the stomach.

For a complete list of videos, visit our video library