Assume That During the Last Several Years, the Annual Rate

question 2

Multiple Choice

Assume that during the last several years, the annual rate of inflation was 4 percent and the annual growth rate of the money supply was 5 percent. During the last 12 months, however, the monetary authorities have increased the money supply at a 12 percent annual rate. The expected inflation rate for the next period will be

• A) higher than 4 percent under the rational expectations hypothesis.
• B) 4 percent under the adaptive expectations hypothesis.
• C) higher than 4 percent under both the adaptive and rational expectations hypotheses.
• D) both a and b.

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Definitions:

Structured Observations

An observational research method where data is collected systematically according to a predefined scheme or protocol.

Participant Observations

A qualitative research method where the researcher actively engages in the community or environment being studied to gather detailed firsthand information.

Program Evaluation

A systematic method for collecting, analyzing, and using information to answer questions about projects, policies, and programs, particularly about their effectiveness and efficiency.

Data Collection Plan

A detailed strategy outlining the methods, timing, and resources necessary to gather information for a study or project.