Author Question: According to rational expectations theory, which of the following is the best approach to lower the ... (Read 24 times)

luminitza · **on:** Jun 30, 2018

According to rational expectations theory, which of the following is the best approach to lower the inflation rate?
a. Preannounced stable government policies.
b. Unpredictable government policies.
c. First predictable and then unpredictable government policies.
d. None of these.

Question 2

Suppose your nominal income this year is 5 percent higher than last year. If the inflation rate for the period was 3 percent, then your real income was:
a. increased by 1.67 percent.
b. increased by 2 percent.
c. increased by 8 percent.
d. decreased by 0.6 percent.