When people use recent information to gradually adjust their forecasts of inflation, they are said to have:
A. static expectations.
B. adaptive expectations.
C. rational expectations.
D. spiraling expectations.
Answer: B
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
Refer to Figure 16-1. With perfect price discrimination, the firm will produce and sell
A) Q1 units. B) Q2 units. C) Q3 units. D) Q4 units.
The situation in which a firm charges different prices for different blocks of output is referred to as:
A) first-degree price discrimination. B) second-degree price discrimination. C) third-degree price discrimination. D) fourth-degree price discrimination.
The occurrence of the Great Depression offered evidence that supported
a. the classical theory of economics b. the need for the government to practice the policy of laissez faire c. the need for the government to control prices d. Congress to take action to stop rising prices e. the Keynesian idea that the government needed to guide the economy