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Self Fulfilling Prophecy

What is a Self Fulfilling Prophecy?

A Self Fulfilling Prophecy is a prediction that becomes true as a consequence of the prediction existing. In economics, they are used to explain the role of expectations in the occurrence of events. For example, a self-fulfilling recession occurs following the expectation of a crisis, which causes investors and consumers to invest a smaller portion of their funds out of fear of losing money. That results in slower economic activity, which leads to an economic recession.

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