What does adaptive expectations mean? Pick the most appropriate definition.

Economic agents expect next period's inflation to be equal to last period's inflation.

Investors adapt their investment decisions to the inflation rate.

The size of a fiscal stimulus package is adapted to the depth of each recession.

Investors adapt their investment decisions to the interest rate.

Suppose that Canada experiences a recession and, as a result, reduces imports of US goods. Using the short-run model, what will be the impact on the US economy? Pick all that apply.

The IS curve will shift right

Short run output will be zero

Inflation will rise

Short run output will be negative

The IS curve will shift left

Inflation will fall

Short run output will be positive

Inflation will stay constant

The PC curve will shift up

The PC curve will shift down