One key implication of rational expectations is that
A. anticipated monetary policy cannot affect the level of real Gross Domestic Product (GDP).
B. anticipated monetary policy has no effect on the price level.
C. both unanticipated monetary policy and anticipated monetary policy have an effect on the economy.
D. unanticipated monetary policy has no effect on the economy but anticipated monetary policy does have an effect on the economy.
Answer: A
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The greater the tax wedge, the ________ the amount of employment and the ________ potential GDP
A) larger; smaller B) smaller; smaller C) smaller; larger D) larger; larger E) None of the above because the tax wedge does not affect employment or potential GDP.
A normal good is one for which
A) demand increases as income increases. B) demand increases as income decreases. C) the demand curve is horizontal. D) demand increases as the price of a substitute increases.
Which of the following does not hinder economic development?
a. Lack of education b. Poor agricultural productivity c. Low investment in human capital d. Lack of technology e. Good nutrition
The sum of the coins and currencies in the bank's vault and its deposit in the Fed is called:
a. vault cash. b. transaction deposits. c. legal reserves. d. required reserves. e. loanable funds.