Inflationary expectations are important, because widespread changes in inflationary expectations affect:
A)the distribution of income.
B)relative prices.
C)actual inflation.
D)Okun's rule of thumb.

Question

Quizplus · Accepted Answer

Inflationary expectations can lead to actual inflation as businesses and consumers adjust their behavior based on what they expect prices to do in the future, potentially creating a self-fulfilling prophecy.

Inflationary Expectations Are Important, Because Widespread Changes in Inflationary Expectations