If people assume that future rates of inflation will follow the pattern of inflation rates in the past,they are said to have

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If people assume that future rates of inflation will follow the pattern of inflation rates in the past, they are said to have adaptive expectations. This means that their expectations are based on past experiences and they adjust their expectations as new information becomes available. Rational expectations, on the other hand, assume that people are fully informed and always make the best possible economic decision. Unstable and accommodative expectations are not commonly used economic terms.

If People Assume That Future Rates of Inflation Will Follow