Adaptive inflationary expectations are based on
A) monetary growth.
B) all available information.
C) previous inflation rates.
D) price changes in futures markets.

Question

Quizplus · Accepted Answer

Adaptive inflationary expectations are based on previous inflation rates. This means that individuals base their current expectations of inflation on the inflation rate they have experienced in the past. As a result, if inflation has been high in the past, individuals will expect it to be high in the future, leading to a self-fulfilling prophecy.

Adaptive Inflationary Expectations Are Based on