If expectations are formed rationally: a. then activist monetary policy may yield no gains whatsoever. b. then inflation will only hurt borrowers and not lenders. c. then monetary policy has real effects in the long run. d. then inflation will only hurt lenders and not borrowers. e. then individuals expect inflation equal to their most recent experience.

The appropriate answer is 'the liquid state is more dense than the solid state'. This phenomenon explains why ice floats when it is frozen. When water freezes it expands by approximately 10 percent. It also becomes less dense. This explains why only 10 percent of an iceberg is above the ocean water and the remaining 90 percent is below the waves.