compare and contrast the behaviour of the economy under adaptive and rational expectations
compare and contrast the behaviour of the economy under adaptive and rational expectations
Homework Answers
In economics, adaptive expectations refers to a hypothesized process by which people make their expectations about what will happen in the future based on past trends; while rational expectations refers to an economic theory that states while making decisions, individual agents will base their decisions on their rational outlook, available information and past experiences.
In an economy under adaptive expectations, if inflation is increasing expectations will tend to lag behind the current level of inflation, which will depend on the weights provided to past and present values. Under rational expectations when the information is unbiased and agents rational then on average expectations will equal the actual rate.
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compare and contrast the behaviour of the economy under adaptive and rational expectations
Questions regarding rational expectations, thank you!: 1.) Which of the following statements about rational expectations is...
Questions regarding rational expectations, thank you!: 1.) Which of the following statements about rational expectations is not true? a.) Rational expectations are different from adaptive expectations b.) Rational expectations are identical to optimal forecasts c.) Rational expectations may not be accurate d.) Rational expectations theory suggests that forecasts errors of expectations are sizable and can be predicted 2.) Suppose that the average growth rate of the economy has been 2%. Given a forecast of 4% growth this year, if rational...
Problem I. Suppose that, instead of expectations being rational, expectations are adaptive. That is, each period...
Problem I. Suppose that, instead of expectations being rational, expectations are adaptive. That is, each period the private sector expects that the inflation rate will be what it was the previous period. That is,, where i-1 is the actual inflation rate last period. Under these circumstances, determine what the actual inflation rate and the level of output will be, given i-1. How will the inflation rate and output evolve over time? What will the inflation rate and the level of...
2. What is the difference between rational expectations and adaptive expectations? 3. Do neoclassical economists tend...
2. What is the difference between rational expectations and adaptive expectations? 3. Do neoclassical economists tend to focus more on long term economic growth or on recessions? Explain briefly.
Which of the following statement statements about expectations theory is true? a) Rational expectations theory does...
Which of the following statement statements about expectations theory is true? a) Rational expectations theory does not imply that people always predict inflation correctly. b) Adaptive expectations theory implies that people form expectations on the basis of all available information. C) Rational expectations theory was developed before adaptive expectations theory. D) Adaptive expectations theory identifies prediction errors at random. E) Rational expectations theory implies that people's expectations of future inflation are based on their most recent experience.
Compare and contrast the effect of a rise in government spending on an economy under a)...
Compare and contrast the effect of a rise in government spending on an economy under a) fixed and b) floating exchange rate.
8. Compare and contrast the mechanisms by which the innate and adaptive immune response recognize pathogens....
8. Compare and contrast the mechanisms by which the innate and adaptive immune response recognize pathogens. Make sure you are specific in your response.
What is the time-inconsistency problem? Is an independent central bank the solution? 'The economy's behaviour differs...
What is the time-inconsistency problem? Is an independent central bank the solution? 'The economy's behaviour differs radically under rational and adaptive expectations' Discuss 2. 3. Does monetary feedback policy have no effect on the economy's output under rational expectations? Compare and contrast the effects of a rise in government spending on an economy under a) fixed and b) floating exchange rates. 5. Explain the workings of the Classical Model. What would the model imply for the economy if there was...
When market participants have rational expectations, A. they are able to forecast interest rates more accurately...
When market participants have rational expectations, A. they are able to forecast interest rates more accurately than inflation rates. B. they are less likely to make accurate forecasts than if they have adaptive expectations. C. they use all information available to them. D. they only slowly adjust their expectations to news which could affect prices or returns.
Compare and contrast innate and adaptive immunity by explaining how they differ is the following 2...
Compare and contrast innate and adaptive immunity by explaining how they differ is the following 2 questions (I-III). Please answer in complete sentences. How do these 2 types of immunity differ is the timing of their response? How do the receptors as innate and adaptive immune cells differ in what they recognize? Please describe what the receptors on immune cells recognize and what the receptors on adaptive immune cells recognize. Complement proteins normally circulate in the blood and provide early...
Compare and contrast what you learned about the change in the economy of the 1950s and...
Compare and contrast what you learned about the change in the economy of the 1950s and 1960s to how The Box describes the change in the shipping industry during these times frames.
Problem I. Suppose that, instead of expectations being rational, expectations are adaptive. That is, each period the private sector expects that the inflation rate will be what it was the previous period. That is,, where i-1 is the actual inflation rate last period. Under these circumstances, determine what the actual inflation rate and the level of output will be, given i-1. How will the inflation rate and output evolve over time? What will the inflation rate and the level of...
2. What is the difference between rational expectations and adaptive expectations? 3. Do neoclassical economists tend to focus more on long term economic growth or on recessions? Explain briefly.
8. Compare and contrast the mechanisms by which the innate and adaptive immune response recognize pathogens. Make sure you are specific in your response.
What is the time-inconsistency problem? Is an independent central bank the solution? 'The economy's behaviour differs radically under rational and adaptive expectations' Discuss 2. 3. Does monetary feedback policy have no effect on the economy's output under rational expectations? Compare and contrast the effects of a rise in government spending on an economy under a) fixed and b) floating exchange rates. 5. Explain the workings of the Classical Model. What would the model imply for the economy if there was...
Compare and contrast innate and adaptive immunity by explaining how they differ is the following 2 questions (I-III). Please answer in complete sentences. How do these 2 types of immunity differ is the timing of their response? How do the receptors as innate and adaptive immune cells differ in what they recognize? Please describe what the receptors on immune cells recognize and what the receptors on adaptive immune cells recognize. Complement proteins normally circulate in the blood and provide early...
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