If the inflation rate in 2013 was 2.5 percent, and because of that people expect the inflation rate in 2014 will also be 2.5%, these people are said to have
A) rational expectations.
B) expectations of stagflation.
C) adaptive expectations.
D) expectations of supply shocks.
C
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Long-distance travel by bus is an inferior good. As people's incomes increase and other things remain the same, you predict that the
A) price of long-distance travel by bus will fall and the demand for long-distance travel by bus will increase. B) price of long-distance travel by bus will fall. C) demand for long-distance travel by bus will decrease and the price will rise. D) demand for long-distance travel by bus will increase as the price of long-distance travel by bus falls.
Economic agents (for example, consumers or firms) often do things that at first glance seem to be inconsistent with their self-interest
People tip at restaurants and when they are on vacation even if they have no intention to return to the same place. Firms, sometimes, install costly pollution abatement equipment voluntarily. How can these deviations from Nash predictions be explained?
If an economy operates on its production possibilities frontier, the natural unemployment rate must be:
a. zero. b. positive. c. negative. d. at 1 percent. e. at 5 percent.
If total revenue increases when price increases:
A. demand is inelastic. B. demand is unit elastic. C. demand is elastic. D. Any of these could be true.