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Bapelol Bapelol
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Differentiate between the adaptive expectations and the rational expectations models of inflation.
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Macroeconomics

Macroeconomics


Edition: 3rd
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choroni64choroni64
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The adaptive expectations model of inflation states that inflationary expectations are determined by the level of inflation in the recent past. In contrast, the rational expectations model assumes that people have highly sophisticated beliefs about inflation that rationally incorporate all the information available to them.
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