If expectations of the future inflation rate are formed solely on the basis of a weightedaverage of past inflation rates, then economists would say that expectation formation isA) irrational.B) rational.C) adaptive.D) reasonable.

Inflation results inA) ease of planning for the future.B) ease of comparing prices over time.C) lower nominal interest rates.D) difficulty interpreting relative price movements.

In comparing rational expectations theory to Keynesian macroeconomics, rational expectations theory is seen as moreMultiple choice question.unrealistic and Keynesian economics is seen as more contemporary.dynamic and Keynesian economics is seen as more static.government focused and Keynesian economics is seen as more monetary focused.simplistic and Keynesian economics is seen as more complex.

Monetarism assumes that consumers will adjust to market changesMultiple choice question.will not occur, while rational expectations theory assumes the changes will occur over time.over time, while rational expectations theory assumes the changes will never occur.immediately, while rational expectations theory assumes the changes will occur over time.over time, while rational expectations theory assumes the changes will occur immediately.

Unlike Keynesian macroeconomics, rational expectations theory assumes consumers will adjustMultiple choice question.over time.immediately. after government interventions take place.never.

If inflation is higher than we expected, this will result in a real interest rate than expected and a redistribution of wealth from to . Group of answer choices higher, borrowers, lenders None of these options lower, borrowers, lenders lower, lenders, borrowers