If During the Past Decade the Average Rate of Monetary

question 12

Multiple Choice

If during the past decade the average rate of monetary growth has been 5% and the average inflation rate has been 5%,everything else held constant,when the Federal Reserve announces that the new rate of monetary growth will be 10%,the adaptive expectation forecast of the inflation rate is

• A)5%.
• B)between 5 and 10%.
• C)10%.
• D)more than 10%.

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