The expected inflation rate is the
A) same as the actual inflation rate.
B) inter-annual, non-energy inflation rate.
C) inflation rate that people forecast and use to set the money wage and other money prices.
D) rate that people expect the Bureau of Labor Statistics to announce each month, on which bookies take bets.
E) inflation rate that the Federal Reserve system announces as the policy goal for the year.
C
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When the inflation rate rises, the purchasing power of nominal income:
a. remains unchanged. b. decreases. c. increases. d. changes by the inflation rate minus one.
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower