Author Question: According to the rational expectations school, people base their expectations about inflation on: ... (Read 112 times)

nramada · **on:** Jun 30, 2018

According to the rational expectations school, people base their expectations about inflation on:
a. the announcement of a change in policy.
b. weighted averages of previous inflation rates, with the most distant getting the heaviest weight.
c. all information available to them.
d. changes in monetary policy only.
e. changes in both monetary and fiscal policy.

Question 2

Which of the following is an outcome of prolonged unemployment?
a. An improvement in labor skills
b. An increase in the inflation rate
c. A rise in potential GDP
d. A fall in potential GDP
e. An increase in the size of the labor force