Which of the Following Statements Best Completes the Following Sentence;

question 18

Multiple Choice

Which of the following statements best completes the following sentence; "Prior to World War I, when the U.S.was on the gold standard, inflation in the U.S1/4"?

• A)Averaged 3.5 percent per year but was highly variable
• B)Averaged less than one percent per year and was highly variable
• C)Averaged less than one percent per year and was stable
• D)Averaged 3.5 percent per year and was stable

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Definitions:

Rational Expectations Theory

The hypothesis that individuals form forecasts about the future based on all available information and past experiences, affecting their economic decisions.

Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a specific time period.

Government Intervention

The direct or indirect involvement of governmental actions in the market to influence the economy, correct market failures, or protect the public interest.

John Maynard Keynes

A British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments, emphasizing the importance of government intervention during economic downturns.