The Expectations Effect Is the

question 113

Multiple Choice

The expectations effect is the

• A) increase in the interest rate brought on by an expected increase in Real GDP.
• B) increase in the interest rate due to a higher expected inflation rate.
• C) decrease in the interest rate due to an expected increase in the supply of loanable funds.
• D) idea that people form their expectations of inflation by considering all available information about past,present,and future inflation.
• E) idea that people form their expectations of inflation by considering only information about past inflation experience.

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