According to the Theory of Adaptive Expectations, If the Inflation

question 45

Multiple Choice

According to the theory of adaptive expectations, if the inflation rate has been 10 percent for the last ten years, people will expect next year's inflation rate to be

• A) 10 percent.
• B) higher than 10 percent.
• C) lower than 10 percent.
• D) whatever the government announces.
• E) zero.

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Definitions:

Incidental Beneficiary

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Privity of Contract

The legal principle that a contract confers rights and imposes obligations only on the parties to the contract, barring any third party from enforcing or interfering with the agreement.

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The amount paid out on an insurance policy, typically upon the occurrence of the event insured against.

Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, designed to harmonize legal standards across states.