​If the Ideal Inflation Rate in an Economy Is 3

question 49

Multiple Choice

​If the ideal inflation rate in an economy is 3% and the inflation gap is 8%, the actual inflation rate in the economy must be

• A)3%.
• B)5%.
• C)8%.
• D)11%.

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Definitions:

Compatible

Two events are compatible if they could both occur.

Coin Flipped

A metaphorical expression used to describe an event that has an equal probability of occurring in one of two ways.

Probability

A measure of the likelihood that an event will occur.

Heads

In the context of coin tosses, it refers to one of the two possible outcomes where the side of the coin showing the head is facing up.