Which of the Following Assumptions Best Characterised the Assumption About

Multiple Choice

Which of the following assumptions best characterised the assumption about how individuals formed expectations of inflation by the early 1970s?

A) Expected inflation for the current year equal to the average inflation rate over the past five years.
B) Expected inflation for the current year approximately equal to last year's inflation rate.
C) Expected inflation for the current year equal to the average inflation rate over the past ten years.
D) Expected inflation for the current year larger than last year's inflation rate.
E) Expected inflation for the current year smaller than last year's inflation rate.