Rational Expectations of Inflation Means That When Decisions Are Made

question 6

True/False

Rational expectations of inflation means that when decisions are made regarding inflation, people use information rather than making assumptions that inflation will rise or decline in the future.

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Definitions:

Minimum Wage

The lowest legal hourly pay rate that an employer can pay an employee.

AOL Corporation

An American web portal and online service provider, which historically offered a branded internet service that allowed users to connect to the internet and access its own network of content.

Consumer Price Index

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate inflation.

Purchasing Power

The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.