A low rate of expected inflation tends to lead to a ________ rate of actual inflation and a high rate of expected inflation tends to lead to a ________ rate of actual inflation.
A)high; high
B)high; low
C)low; low
D)low; high

Question

Quizplus · Accepted Answer

Households and businesses become accustomed to gradually rising prices so actual inflation seems to follow inflation expectations. Inflation expectations are built on recent past experiences.

A Low Rate of Expected Inflation Tends to Lead to a ________