expectations is the idea that people slowly incorporate new information and adapt to changes they observe in the economy. (Enter one word in the blank.)

The word that fits in the blank is "adaptive."

Explanation

In economics, expectations play a critical role in how individuals and businesses make decisions in response to changing information and circumstances. The adaptive expectations theory suggests that people do not form their expectations based solely on static data; instead, they adjust their beliefs and predictions based on new information over time. For example, if the inflation rate starts to rise, individuals might revise their future expectations regarding prices and wages as they observe this trend. Thus, the concept of being adaptive in their expectations allows individuals to be more responsive and better prepared for economic fluctuations. This adaptability is crucial for effective decision-making in dynamic environments.