When people use recent information to gradually adjust their forecasts of inflation, they are said to have:
A) static expectations.
B) adaptive expectations.
C) rational expectations.
D) spiraling expectations.

Question

Quizplus · Accepted Answer

The use of recent information to gradually adjust forecasts is known as adaptive expectations. This means people are updating their expectations based on past experiences which can result in a slow response to changes in inflation rate.

When People Use Recent Information to Gradually Adjust Their Forecasts