The rational expectations theory describes the assumption that people are _____, and the adaptive expectations theory describes the assumption that people are _____.

Question

Quizplus · Accepted Answer

The rational expectations theory assumes that people are forward-looking and base their expectations about the future on all available information, while the adaptive expectations theory assumes that people are backward-looking and base their expectations on past experiences or trends.

The Rational Expectations Theory Describes the Assumption That People Are