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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. It then results in slower economic activity, which leads to an economic recession.

Additional Resources

CFI is a global provider of financial modeling courses and of the FMVA Certification. CFI’s mission is to help all professionals improve their technical skills. If you are a student or are looking for a career change, the CFI website has a multitude of free resources to help you jumpstart your Career in Finance. If you seek to improve your technical skills check out some of our most popular courses. Below are some additional resources for you to further explore:

 

The Financial Modeling Certification