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The economist from the Federal Reserve have projected a 10% probability that inflation will
increased to 12.43%. Another economist suggest there is a 40% chance that inflation will
increase to 10.94%. The President of the Federal Reserve believes it is a 50% chance that
inflation will fall to 7.75%. What is the expected inflation rate based on these projections?

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  • 1. The economist from the Federal Reserve have projected a 10% probability that inflation will increased to 12.43%. Another economist suggest there is a 40% chance that inflation will increase to 10.94%. The President of the Federal Reserve believes it is a 50% chance that inflation will fall to 7.75%. What is the expected inflation rate based on these projections?