Answer :
Adaptive expectations is the idea that people think the recent past is the best predictor of the future. Hence, Option A is correct.
Adaptive Expectations According to hypothesis theory, people modify their predictions of the future based on their experiences and recent past events. In macroeconomics, adaptive expectations played a significant influence.
Irving Fisher employed the adaptive expectations hypothesis for the first time, though not explicitly. The work on hyperinflations by Phillip Cagan, however, gave the theory its main thrust. Multiple applications made substantial use of the hypothesis.
A hypothesised process by which people construct their expectations about what will happen in the future based on what has already occurred is known as adaptive expectancies in the field of economics.
Other distributed lag formulations were employed in the literature to include extrapolative or regressive features in addition to adaptive expectations.
Therefore, Option A is correct.
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The complete question has been attached in text form:
The hypothesis that people believe the best indicator of the future is the recent past is known as:
adaptive expectations
rational expectations
trend expectations.
lagged expectations.
