George believes that the inflation rate will be around 9 percent this year because it was around 9 percent in the previous year.George can be said to have ________.

Question

Quizplus · Accepted Answer

George is using adaptive expectations, which is when an individual bases their future expectations on their observations from the past. He assumes that the inflation rate will be similar to the previous year's rate, without considering any other factors that may affect the inflation rate. This type of expectation is not based on rational or composite factors, but rather on past observations, making C the best choice.

George Believes That the Inflation Rate Will Be Around 9