If expectations about inflation are adaptive,they are ________.
A)quick to respond to price shocks
B)consistent with the notion of sticky prices
C)based on changes in productivity
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

Adaptive expectations about inflation imply that people form their expectations based on past experiences of inflation, which is consistent with the notion of sticky prices, as adjustments in expectations and consequently in prices do not happen immediately but rather gradually over time.

If Expectations About Inflation Are Adaptive,they Are ________