Suppose the inflation rate has been 6 percent over the past four years. If the Federal Reserve announces an increase in the growth of the money supply, adaptive expectations would predict an inflation rate of 6 percent.
a. True
b. False
Indicate whether the statement is true or false
Question 2
If an increase prices increases total revenue in the short run, what will it do to total revenue in the long run?
a. It will decrease total revenue in the long run.
b. It will increase total revenue in the long run.
c. It will leave total revenue unchanged in the long run.
d. Any of the above results are possible in the long run.
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