Booms and recessions (IV): dynamic aggregate supply and demand - Inflation expectations
3 important questions on Booms and recessions (IV): dynamic aggregate supply and demand - Inflation expectations
What are adaptive expectations?
expectations that are adjusted when turned out to be wrong
When does one speak of perfect foresight?
When the expectations are always 100% correct and everything is foreseen
What are economically rational expectations?
Individuals gather information to improve expectations only as long as the benefits outweigh the costs
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