A Major Factor in Determining the Rational Expectation of Inflation

question 68

Multiple Choice

A major factor in determining the rational expectation of inflation is

• A)forecasts of fiscal policy.
• B)the size of the budget deficit.
• C)the recent past behavior of the stock market.
• D)the previous month's unemployment rate.
• E)forecasts of the Fed's monetary policy.

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Definitions:

Scheduled Payments

Regular, often monthly, payments agreed upon to repay a loan over a certain period of time.

Rate of Return

The net gain or loss of an investment over a specified period, expressed as a percentage of the investment's initial cost.

Compounded Monthly

The process in which interest earned on an investment is added to the principal balance, and then future interest accrual includes the increased balance, recalculated on a monthly basis.

Total Interest Earned

The cumulative amount of interest received from an investment, loan, or savings account, over a particular period.