Multiple Choice
According to the theory of adaptive expectations, if the inflation rate has been 4.2 percent for the last ten years, people will expect next year's inflation rate to be:
A) 4.2 percent.
B) higher than 4.2 percent.
C) lower than 4.2 percent.
D) 0;that is, they will expect no inflation.
E) 8.4 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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