A Rational Expectation of Inflation Is

question 360

Multiple Choice

A rational expectation of inflation is

• A) why unexpected inflation redistributes income.
• B) a forecast of inflation that uses all relevant information.
• C) how economists make perfect forecasts of inflation.
• D) how unexpected inflation affects the economy.

---

Definitions:

Raw Materials

Basic materials and substances that are used in the production process to create goods, ranging from metals and chemicals to grains and plastics.

Selling and Administrative Expense

Costs indirectly related to the production of goods or services, including marketing, management, and office expenses.

Budgeted Unit Sales

The projected number of units that a company expects to sell over a specific period, as included in its budget.

Depreciation

A method of allocating the cost of a tangible asset over its useful life.