A rational expectation of the inflation rate is
A) always correct.
B) a forecast based on the forecasted actions of the Fed and other relevant determinant factors.
C) a forecast based only on the historical evolution of inflation over the last 100 years.
D) an expected inflation rate between 5 percent and 10 percent.
E) an expected inflation rate between 1 percent and 5 percent.
B
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Suppose your expenses for this term are as follows: tuition: $28,000, room and board: $9,000, books and other educational supplies: $2,500
Further, during the term, you can only work part-time and earn $16,000 instead of your full-time salary of $42,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college? A) $36,500 B) $56,500 C) $65,500 D) $72,500
Suppose the government decides that milk producers are not earning a high enough price for their milk to maintain an adequate standard of living and that the solution to the problem is to guarantee the milk producers a minimum price. We would expect that
A) consumers will have to pay a higher price per gallon of milk and will not be able to consume as much as they did before. B) the government will have to purchase the surplus milk on the market and then find a means of storing this milk. C) the dairy farmers will enjoy a higher standard of living at the expense of taxpayers and consumers. D) all of the above