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.

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Definitions:

Genetic Predisposition

The increased likelihood of developing a particular disease or trait based on a person's genetic makeup.

History of Trauma

Refers to the personal and collective experiences and emotional responses to deeply distressing or disturbing events in an individual's or group's past.

Borderline Personality Disorder

A mental health disorder characterized by unstable moods, behavior, and relationships.

Negative Emotional Reactions

Refers to undesirable feelings or emotions that result from certain experiences or thoughts.