Inflation and expectations are rational-longrun equilibrium

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Reference no: EM131097603

When there are expectations that there will be inflation and expectations are rational, the longrun equilibrium will be:

(a) Where the actual rate of inflation is lower than the expected rate;

(b) Where the actual rate of inflation is higher than the expected rate;

(d) There cannot be equilibrium when there are expectations of inflation.

Reference no: EM131097603

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