Related to the Economics in Practice on p.656: Surveys by the bank of England suggest that consumers tend to expect future inflation to be
A)what they perceive past inflation to have been.
B)equal to the actual estimates of past inflation made by the government.
C)directly related to the interest rate.
D)relatively unpredictable.

Question

Quizplus · Accepted Answer

The surveys by the Bank of England suggest that consumers tend to anchor their inflation expectations to past inflation rates, meaning they expect future inflation to be what they perceive past inflation to have been. This indicates that consumers may not be fully informed about the actual estimates of past inflation made by the government or may not consider other relevant factors, such as changes in the economy or monetary policy.

Related to the Economics in Practice on P