Part 1 The table below reports the actual inflation rate from 2016 to 2020. Complete the table, assuming people form expectations adaptively. Give all answers to two decimals. Year 2016 2017 2018 2019 2020 Actual inflation rate 3% 3.50% 5.00% 3.50% 1.50% Expected inflation rate a) d) e) 3% 3.50% % % % b) Choose one or more: in A. When inflation is decreasing from year to year, people tend to overestimate inflation. n B. When inflation is increasing from year to year, people tend to underestimate inflation. n C. Monetary policy can reduce unemployment only if the policy is expected. nD. When inflation is increasing from year to year, people tend to overestimate inflation. in E. When inflation is decreasing from year to year, people tend to underestimate inflation. c) f) Error 0% 1.50% Part 2 Look back at the table. Assuming people form expectations adaptively, which of the following statements are correct? % % %