Expectations theory tells us that what people think can impact the economy.

Name: Expectations theory tells us that what people think can impact the economy.
Brand: Quizplus
Rating: 4.7 (45 reviews)

Question

Quizplus · Accepted Answer

Expectations theory suggests that people's expectations about future inflation and interest rates can impact their current behavior, such as their propensity to save or invest. This, in turn, can affect economic outcomes such as consumption, investment, and economic growth. Therefore, what people think can indeed have an impact on the economy.

Expectations Theory Tells Us That What People Think Can Impact