We can get an average real rate if we assume expected inflation and actual inflation are on average the same ________.
A)when we look over a relatively long period of time
B)when we look over a relatively short period of time
C)among different countries
D)among neighboring countries

Question

Quizplus · Accepted Answer

Inflation can be volatile and fluctuate significantly over short periods of time. Therefore, assuming expected and actual inflation are the same over a short time period would not provide an accurate estimate of the average real rate. However, over a long period of time, inflation tends to average out, and assuming expected and actual inflation are the same would be a reasonable assumption.

We Can Get an Average Real Rate If We Assume