IGNOU BECC 116 2025 2026 - Explain the concept of adaptive expectations. What are its limitations

Question

Explain the concept of adaptive expectations. What are its limitations?

02 Mar 2026

Answer :

Word Count : 321

Adaptive expectations refer to a theory in economics where individuals form their expectations about future events or variables based on past experiences and historical data. In this model, people adjust their expectations gradually over time as new information becomes available. The idea is that if, for example, inflation was higher than expected in the past, individuals will revise their expectations of future inflation upward, but only by a fraction of the difference between expected and actual inflation. Essentially, adaptive expectations imply that people's forecasts of future values will always "lag" behind reality because they adjust expectations based on the past errors in prediction.

______ _________ _______ ____ _______ _____ __________ _________ __________ _______ _________ _________.
__________ ________ _____ ________ __________ _______ _______ ____ ____ ________ _____ ______.
_____ ___ ______ ____ _____ ______ __________ __________ ____ ___ ___.
____ ___ ______ _____ _____ __________ __________ _____ ____ _____ _____ ______.
____ __________ ______ __________ _________ ______ __________ __________ _________.
______ __________ _______ _____ ______ _________ ____ _______ ________ _____ ____.
___ ____ __________ ____ _________ ______ _____.
___ ________ _________ ____ _______.
______ ____ _________ ________ _________ _____ ________ ______ ______ ___ ___.
___ ____ __________ _____ ________ ____ ______ ____ __________ _______.
___ ____ ____ ___ _____ __________ __________ __________ _________ __________ __________ _________.
_________ ___ ____ ______ _______ ______.
_______ ____ ________ _____ ________ ________ ________ ____ _________ __________ ____ ________.
____ _________ ________ ____ ______ _________ ________ _________.
_______ ___ _____ __________ ___.
___ ______ _______ ________ ______ ___ ___ ____ _____.
____ ______ _________ __________ _________ ____ ________ __________ ______.
_______ _____ ______ _____ ____ ___.
_____ ____ _________ _________ _____ _________ _________ ___ __________ _________ _______.
________ ______ ____ ________ _________ ______ ________ __________ ____ ______.
_________ ________ ____ _________ _______ __________ __________ ______ ________ ___ ________.
______ ______ ___ __________ __________ __________ _________.
_____ _____ ________ ________ ______ ____ ______ ________.
________ _______ _________ ________.

IGNOU ACADEMY

Your IGNOU journey, made easier.

Solved Assignments
Study Notes
Guess Papers
Question Papers

Call Us WhatsApp

STUDY • PREPARE • SUCCEED

Skip in 10

IGNOU Solved Assignments Assignments Ignou Projects Project Previous Year Solved Exam Papers Notes Notes Sample Question Papers Sample Question Papers