Thursday
October 2, 2014

Homework Help: MACRO

Posted by Anastasia on Saturday, May 11, 2013 at 8:19pm.

Suppose last year's inflation rate was 5%, but Wall Street analysts expect this year's interest rate to be 4%. Which of the following correctly describes people's beliefs according to rational or adaptive expectations theories?

A.) According to rational expectations, people will anticipate 5% inflation this year.

B.) According to adaptive expectations, people will anticipate 4% inflation this year.

C.) According to rational expectations, people will anticipate 1% inflation this year.

D.) According to adaptive expectations, people will anticipate 1% inflation this year.

E.) None of these answers is correct.

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

College Finance - 1.A recent edition of The Wall Street Journal reported ...
Economics - The formula given was: (real rate of interest) = (nominal rate of ...
economics - Jerry will receive the following payments: 946 in year 3, 929 in ...
fanince - ) A thirty-year U.S Treasury bond has a 4.0 percent interest rate. In ...
economics - Suppose Caroline is a cinephile and buys only movie tickets. ...
math - Please someone show me how to work this one out? Suppose Caroline is a ...
Math/Finance - Due to a recession, expected inflation this year is only 2%. ...
Managerial Finance - Due to a recession, expected inflation this year is only 2...
Strayer university - Suppose that the Fed's inflation target is 2%, potential ...
Finance - 4.A thirty year US treasury bond has a 4.0 percent interest rate.In ...

Search
Members