If Expectations Are Rational, the Difference Between the Actual Inflation

question 79

Multiple Choice

If expectations are rational, the difference between the actual inflation rate and the forecast for inflation is:

• A)​positive when inflation is increasing.
• B)​negative when inflation is increasing.
• C)​random.
• D)​greater, the more accurately people anticipate the effects of government policy.

---

Definitions:

Disputes

Conflicts or disagreements between parties, such as between employers and employees, often related to labor issues or contractual matters.

Lawsuit

A legal proceeding in a court by one party against another for the enforcement or protection of a right, or the redress or prevention of a wrong.

Duty of Fair Representation

An obligation that requires labor unions to represent all members equally, without discrimination or negligence.

Bargaining Unit

A body of workers sharing distinct common interests, represented collectively by one labor union in negotiation talks.