If during the past decade the average rate of monetary growth has been
If during the past decade the average rate of monetary growth has been 5% and the average inflation rate has been 5%, everything else held constant, when the Federal Reserve announces that the new rate of monetary growth will be 10%, the adaptive
expectation forecast of the inflation rate is A) 5%.
B) between 5 and 10%.
C) 10%.
D) more than 10%.
ANSWER
A
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