If People Behave According to Rational Expectations Theory, People Would

question 22

Multiple Choice

If people behave according to rational expectations theory, people would expect the rate of inflation this year to be:

• A) the same as last year.
• B) zero, regardless of the rate last year.
• C) the rate based on predictable monetary and fiscal policies.
• D) always higher than last year.

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Definitions:

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A multinational chain of coffeehouses and roastery reserves known for its signature coffees, commitment to sustainability, and innovative customer experience.