If People Expect an Inflation Rate of 3% and Later

question 101

Multiple Choice

If people expect an inflation rate of 3% and later it turns out to be 5%,then the real rate of return will be:

• A) less than the equilibrium rate.
• B) greater than the equilibrium rate.
• C) 3%.
• D) 5%.

---

Definitions:

Attention

Attention is the selective concentration on information or stimuli, excluding other perceivable information.

Nile River

One of the world’s longest rivers, flowing through northeastern Africa, it is a crucial water source for the countries it spans and has been integral to the region's history.

Confident

Feeling or showing certainty about something or self-assurance.

Correct

Conforming to fact or truth; free from error, in alignment with a standard or expectation.