The Expectations Effect Is the

Multiple Choice

The expectations effect is the

A) increase in the interest rate brought on by an expected increase in Real GDP.
B) increase in the interest rate due to a higher expected inflation rate.
C) decrease in the interest rate due to an expected increase in the supply of loanable funds.
D) idea that people form their expectations of inflation by considering all available information about past,present,and future inflation.
E) idea that people form their expectations of inflation by considering only information about past inflation experience.