1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
amm1812
3 years ago
11

If expectations of the future inflation rate are formed solely on the basis of a weighted average of past inflation rates, then

economics would say that expectation formation is:________.A) irrational.B) rational.C) adaptive.D) reasonable.
Business
1 answer:
vaieri [72.5K]3 years ago
7 0

Option C

If expectations of the future inflation rate are formed solely on the basis of a weighted average of past inflation rates, then economics would say that expectation formation is:  adaptive.

<u>Explanation:</u>

Adaptive expectations hypothesis implies that investors will modify their expectations of future behavior based on current prior behavior. In finance, this impact can effect people to produce investment decisions based on the way of contemporary historical data, such as stock price activity or inflation rates, and modify the data to prophesy future exercise or rates.  

If the market has been trending downward, people will possible expect it to proceed to trend that way because that is what it has been acting in the recent past.

You might be interested in
Bank A offers to lend you money at 10 percent compounded monthly, Bank B at 11 percent compounded quarterly, and Bank C at 12 pe
ahrayia [7]

Answer and Explanation:

The computation is given below:

For Bank A,

Effective annual rate is

= (1 + 0.10 ÷ 12)^12 - 1

= 10.47%

For Bank B,

Effective annual rate is

= (1 + 0.11 ÷ 4)^4 - 1

= 11.46%

And,

For Bank C,

Effective annual rate = 12%

Therefore, Bank A is best to borrow at lowest effective annual rate

8 0
3 years ago
Kingbird, Inc. has the following information available for accruals for the year ended December 31, 2019. The company adjusts it
Anton [14]

Answer:

a-Dec-31. Dr Utility expense   485

                    Cr   Utility bills payable  485

b-Jan-11.  Dr Utility bills payable  485

                        Cr Cash                   485

c-Dec-31. Dr Salary expense  3990

                Cr  Salary payable                3990

d-Dec-31. Dr bank 51600

                 Cr  Loan payable   51600

e-Dec-31 Dr Interest expense  215

                    Cr interest payable     215

f-Dec-31 Dr Account receivable  340

                  Cr   Service revenue  account    340

g-Dec-31. Dr Cash  6840

                 Cr Advance Rent    6840

Explanation:

a-Utility expense incurred for the m/o Dec will be paid in Jan.

c- Salaries of 3990 will be paid on Jan of 4 days.

e-Interest expense for the m/o Dec will be (51600*5%=2580/12=215.

f-The service fee is receivable which will be paid on Jan.

g- Advance rent is received from client.

7 0
2 years ago
The difference between the maximum price a consumer is willing to pay for a product and the actual price the consumer pays is ca
sineoko [7]

Answer:

The answer is consumer's surplus

Explanation:

Consumer's surplus is the difference between what the consumer or buyer is willing to pay and the amount he or she eventually paid.

For example, Mr A is willing to pay $100 for a product and the producer is willing to sell for $90. After much negotiation between mr A and the seller, he eventually paid $85. What he paid was lower than what he was willing to pay before.

So the consumer surplus is $100 - $85 = $15

3 0
3 years ago
AB When considering two mutually exclusive projects, the firm should always select the project whose internal rate of return is
Mnenie [13.5K]

Answer:

False

Explanation:

If an investment project can be repeated, i.e. its life cycle can be extended by reinvesting, the NPV of the project will change.

When considering two mutually exclusive projects, the NPV method should always be considered before the IRR as a means of evaluating which project should be carried out.

3 0
3 years ago
Read 2 more answers
Wage and price stickiness Select one: a. gives rise to a vertical long-run aggregate supply curve. b. gives rise to a vertical s
Tresset [83]

Answer:

d. prevents the economy from producing its potential level of real GDP.

Explanation:

Price-stickiness or Wage-stickiness, is a term that describes a condition in which a nominal price or wage is resistant to change. Often referred to as Nominal Rigidity, this occurs when a price or wage is fixed in nominal terms for a given period of time.

In other words, Price stickiness or Wage Stickiness occurs when workers' earnings or price don't adjust quickly to changes in labor market conditions, thereby creating sustained periods of shortage or surplus.

Hence, Price and Wage stickiness prevent the economy from achieving its natural level of employment and its potential output, which in turn prevents the economy from producing its potential level of real GDP.

5 0
3 years ago
Other questions:
  • A union election was held by the NLRB at Jaxon Industries, and 130 workers cast votes in the election. How many votes in favor o
    6·1 answer
  • A product’s embodied energy in a cradle-to-gate LCA analysis describes: Select one:
    13·2 answers
  • How much unused lending capacity does eternal savings have at step 4?
    12·1 answer
  • Townley inc has provided the following data for the month of February. There were no beginning inventories; consequently, the di
    13·1 answer
  • Billy told his boss, Gwen, that he is going to start training for the upcoming marathon to be healthier and to have more energy
    8·1 answer
  • In fiscal 2016, Snap-On Inc. reported a statutory tax rate of 35%, an effective tax rate of 30.5%. Income before income tax for
    13·1 answer
  • In 1976, ron wayne sold his 10% ownership of which company for $800? walmart
    5·1 answer
  • A coase solution to a problem of externality insures ensures that a socially efficient outcome is to:
    5·1 answer
  • The slope of the demand curve for a monopoly firm is:
    12·1 answer
  • organizations design and implement systems to capture the details of transactions involved in each business
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!