Assume That the Expected Rate of Inflation Is a Function

question 24

Multiple Choice

Assume that the expected rate of inflation is a function of past inflation and that the unemployment rate has been equal to the natural rate of unemployment for some time. Given this information, we know that:

• A) the rate of inflation will approximately be zero.
• B) the rate of inflation should be approximately equal to the natural rate of unemployment.
• C) the rate of inflation should steadily increase over time.
• D) the rate of inflation should steadily decrease over time.
• E) the rate of inflation should neither increase nor decrease.

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Definitions:

Available Balance

The amount of funds in an account that are accessible for withdrawal or use, considering any pending transactions.

Book Balance

The amount of money on record in a company’s financial accounts, often compared to the available cash balance to identify discrepancies.

Average Daily Float

The average amount of uncollected checks in the process of clearing, representing the gap between bank records and available funds.

Checks

Written, dated, and signed instruments that direct a bank to pay a specific sum of money to the bearer or a named party.