Multiple Choice
According to the theory of rational expectations, errors in predicting inflation will
A) be biased upward more often than not.
B) be purely random.
C) tend to be biased downward when inflation is rising, and tend to be biased upward when inflation is falling.
D) tend to be biased upward when inflation is rising, and tend to be biased downward when inflation is falling.
Correct Answer:
Verified
Correct Answer:
Verified
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