If households have information that monetary policy is likely to change in the future, that information will play a role in forming ________
A) adaptive expectations
B) rational expectations
C) tertiary expectations
D) non-adaptive expectations
B
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You have collected data for a cross-section of countries in two time periods, 1960 and 1997, say
Your task is to find the determinants for the Wealth of a Nation (per capita income) and you believe that there are three major determinants: investment in physical capital in both time periods (X1,T and X1,0), investment in human capital or education (X2,T and X2,0), and per capita income in the initial period (Y0). You run the following regression: ln(YT) = ?0 + ?1X1,T + ?2X1,0 + ?3X2,T + ?4X1,0 + ln(Y0) + uT One of your peers suggests that instead, you should run the growth rate in per capita income over the two periods on the change in physical and human capital. For those results to be a parsimonious presentation of your initial regression, what three restrictions would have to hold? How would you test for these? The same person also points out to you that the intercept vanishes in equations where the data is differenced. Is that true? What will be an ideal response?
A price floor on corn would have the effect of
a. creating a surplus regardless of the level at which the price floor is set b. creating a surplus supply when the floor is above the equilibrium price c. creating a shortage when the price floor is set below the equilibrium price d. creating a shortage regardless of where the price floor is set e. ensuring a more equitable distribution of the good among consumers
If there is an economic profit in monopolistic competition, there is
a. an incentive for new firms to enter b. an incentive for existing firms to increase prices c. at least one firm engaged in advertising d. an incentive for existing firms to decrease prices e. the absence of product differentiation
A good time for an American to hold German stocks, ceteris paribus, is when the
A. The return in the German stock market has no relationship to the value of the dollar compared to the euro. B. U.S. dollar depreciates in value compared to the euro. C. Euro is stable compared to the U.S. dollar. D. U.S. dollar appreciates in value compared to the euro.