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.


a

Economics

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