Expected Inflation Is

question 89

Multiple Choice

Expected inflation is:

• A) equal to zero.
• B) equal to the real interest rate.
• C) equal to future periods' inflation rates.
• D) the rate of inflation that firms believe will prevail in macroeconomy.
• E) about 2 percent.

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Definitions:

Marginal Cost

The investment required to manufacture an additional unit of a product or service.

Nonrivalry

The idea that one person’s benefit from a certain good does not reduce the benefit available to others; a characteristic of a public good.

Nonexcludability

The inability to keep nonpayers (free riders) from obtaining benefits from a certain good; a characteristic of a public good.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning their use by one person does not reduce availability to others.