Adaptive expectations theory O a) holds that people's expectations of future inflation are based on their most recent experiences. O b) explains why prices are flexible in the long run. Oc) holds that...

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Extracted text: Adaptive expectations theory O a) holds that people's expectations of future inflation are based on their most recent experiences. O b) explains why prices are flexible in the long run. Oc) holds that people form expectations perfectly. d) explains the relationship between the unemployment rate and inflation. O e) holds that people form expectations on the basis of all available information.