Johnny claims that inflation next year will be 5% because the inflation rate in the past two years has been 5%. Which theorist would be vindicated by this behavior?

Name: Johnny claims that inflation next year will be 5% because the inflation rate in the past two years has been 5%. Which theorist would be vindicated by this behavior?
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Question

Quizplus · Accepted Answer

Milton Friedman's theory of adaptive expectations suggests that people form expectations about future inflation based on past inflation rates.

Johnny Claims That Inflation Next Year Will Be 5% Because