A hypothesis that assumes that people combine the effects of past policy changes on economic events and their own judgment about future effects of current and future policy changes is known as

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Quizplus · Accepted Answer

The hypothesis described in the question is known as rational expectations. Adaptive expectations assume that people base their future expectations on past experiences without considering the impact of policy changes, while modern expectations suggest that people form their expectations based on economic models and forecasts rather than policy changes. Active expectations is not a commonly used term in economics.

A Hypothesis That Assumes That People Combine the Effects of Past