Which of the following assumptions best characterized the assumption about how individuals formed expectations of inflation by the early 1970s?
A) Expected inflation for the current year was smaller than the previous year's inflation rate.
B) Expected inflation for the current year was approximately equal to the previous year's inflation rate.
C) Expected inflation for the current year was less than the previous year's inflation rate.
D) Expected inflation for the current year equal to the average inflation rate over the past five years.
E) Expected inflation for the current year equal to the average inflation rate over the past ten years.
B
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When the R2 of a regression equation is very high, it indicates that
A) all the coefficients are statistically significant. B) the intercept term has no economic meaning. C) a high proportion of the variation in the dependent variable can be accounted for by the variation in the independent variables. D) there is a good chance of serial correlation and so the equation must be discarded.
Which of the following sets of preferences can not satisfy the property of transitivity?
a. Plan A is preferred to plan D. Plan D is preferred to plan B. Plan C is preferred to plan B. b. Plan A is preferred to plan B. Plan B is preferred to plan C. Plan A is preferred to plan C. c. Plan C is preferred to plan A. Plan B is preferred to plan A. Plan C is preferred to plan B. d. Plan D is preferred to plan C. Plan C is preferred to plan B. Plan B is preferred to plan D.