According to Adaptive Expectations Theory,if the Last Three Years of Inflation

question 106

Multiple Choice

According to adaptive expectations theory,if the last three years of inflation were 3 percent,3 percent,and 2 percent,respectively,one would expect inflation the following year to be ________ percent.

• A) 0
• B) 3
• C) 1
• D) 4
• E) 2

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Definitions:

Economic Inefficiency

A situation where resources are not allocated in the most economically effective manner, leading to potential losses in productivity or welfare.

Public Sector

The part of the economy that is controlled by the government and funded by taxpayers.

Representative Democracy

A form of democracy in which citizens elect officials to represent their interests and make governmental decisions.