MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 17, Problem 9SQ
To determine
The expectation that bases on the recent past.
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Students have asked these similar questions
Match the statement to whether it describes rational expectations or adaptive expectations:
A. Decisions are relatively slow to respond to new information about the economy
B. If people expect it to rain a lot next month, they will start buying umbrellas today to take advantage of the relatively lower prices
1. Rational expectations
2. Adaptive expectations
If most people have rational expectations, how long will recession last ? Explain.
How can expectations about the future change what consumer buy now?
Chapter 17 Solutions
MACROECONOMICS FOR TODAY
Ch. 17.3 - Prob. 1YTECh. 17.6 - Prob. 1YTECh. 17 - Prob. 1SQPCh. 17 - Prob. 2SQPCh. 17 - Prob. 3SQPCh. 17 - Prob. 4SQPCh. 17 - Prob. 5SQPCh. 17 - Prob. 6SQPCh. 17 - Prob. 7SQPCh. 17 - Prob. 8SQP
Ch. 17 - Prob. 9SQPCh. 17 - Prob. 1SQCh. 17 - Prob. 2SQCh. 17 - Prob. 3SQCh. 17 - Prob. 4SQCh. 17 - Prob. 5SQCh. 17 - Prob. 6SQCh. 17 - Prob. 7SQCh. 17 - Prob. 8SQCh. 17 - Prob. 9SQCh. 17 - Prob. 10SQCh. 17 - Prob. 11SQCh. 17 - Prob. 12SQCh. 17 - Prob. 13SQCh. 17 - Prob. 14SQCh. 17 - Prob. 15SQCh. 17 - Prob. 16SQCh. 17 - Prob. 17SQCh. 17 - Prob. 18SQCh. 17 - Prob. 19SQCh. 17 - Prob. 20SQ
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Similar questions
- The rational expectations theory assumes that a. market participants formulate their expectations solely on the basis of past information b. market participants formulate their expectations on the basis of past, present, and projected future information. C. market participants lack rational economic behavior. market participants have perfect foresight. d. e. market participants are slow to learn of new policies.arrow_forwardIf most people have rational expectations, how long will recessions lastarrow_forwarddifference between rational expectations and adaptive expectations?arrow_forward
- define adaptive expectations what is its main implicationarrow_forwardIf most people have rational expectations, how long will recessions last? Explain using your beliefs and experiences coupledarrow_forwardRational expectations believe that a. the government must change government spending and taxes during inflation and deflation gaps b. people will form the most accurate possible expectations about the future that they can, using all the available information available to them c. the federal reserve must buy and sell government securities during inflation and deflation gaps d. the economy will never self-correctarrow_forward
- Which theory states that people make decisions based on information they've gathered? A. Life-cycle theory B. Theory of rational expectations C. Keynesian theory D. Theory of adaptive expectationsarrow_forwardThe Figure above shows statistics on Real GDP in Qatar ($billions) from 2012 to 2020, in addition to expectations for the year 2021 and 2022 Real GDP is expected to reach 178 $billions in 2022. What are the main factors that could explain these optimistic expectations?arrow_forwardDefine rational expectations and explain the two rational expectation theories of the business cycle?? Definition of rational expectation: ......... Rational expectations theories. ...... ......arrow_forward
- Assume that inflation expectations are formed via adaptive expectations. Which of the following are examples of equations where agents form expectations via adaptive expectations? Note: n represents inflation, y represents output and the e superscript refers to expectations. I. n+1 = 0.5T -1+ 0.5t-2 II. n°t+1= 0.57 + 0.5Tt-1 II. n°t+1= 0.57 -1 + 0.5yt !i! !3! O 1, Il and II O lonly O l and II O Il onlyarrow_forwardIn the New Keynesian Rational Expectations model with a Taylor rule, if the central bank follows the Taylor principle A. there are two steady states. B. there is one steady state. C. there are three steady states. D. there is no steady state. E. there are many steady states.arrow_forwardExplain the role of expectations in the macroeconomy.arrow_forward
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