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In Which Case Will Adaptive, Extrapolative and Rational Expectations Predict

Question 128

Multiple Choice

In which case will adaptive, extrapolative and rational expectations predict the same inflation rate in the coming year?


A) Inflation is 4 percent last year, 2 percent this year, and the economist's model predicts 3 percent.
B) Inflation is 4 percent last year, 2 percent this year, and the economist's model predicts 0 percent.
C) Inflation is 3 percent last year, 2 percent this year, and the economist's model predicts 4.5 percent.
D) In none of the options would the predictions be the same.

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