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.
Correct Answer:

Verified
Correct Answer:
Verified
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