According to rational expectations
A) expectations of inflation are viewed as being an average of past inflation rates.
B) expectations of inflation are viewed as being an average of expected future inflation rates.
C) expectations formation indicates that changes in expectations occur slowly over time as past data change.
D) expectations will not differ from optimal forecasts using all available information.
D
You might also like to view...
The Q-theory of investment is based on high investments being funded by high stock prices of a company
Indicate whether the statement is true or false
You have a bond that pays $18 per year in coupon payments. Which of the following would result in a decrease in the price of your bond?
A) The likelihood that the firm issuing your bond will default on debt decreases. B) Coupon payments on newly-issued bonds rise to $22 per year. C) The price of a share of stock in the company rises. D) Coupon payments on newly-issued bonds fall to $15 per year.
Forecasts by the Congressional Budget Office show spending on Social Security, Medicare, and Medicaid rising from 10
1 percent of GDP in 2015 to ________ percent of GDP in 2090, and by 2090 the federal government will be spending, as a fraction of GDP, ________ on these three programs as it currently spends on all programs combined. A) 16.2 percent; half as much B) 19.8 percent; nearly as much C) 16.2 percent; nearly as much D) 19.8 percent; half as much
This graph shows the cost and revenue curves faced by a monopoly. 
According to the graph shown, if this were a perfectly competitive market, the outcome in the short run would be:
A. Q1, P3. B. The graph is of a monopoly, and therefore there is no way to determine a perfectly competitive outcome. C. Q2, P2. D. Q1, P1.