Can a Keynesian still believe in an active counter-cyclical policy if she adopts the assumption of rational expectations?
A) No, it destroys the case for active policy.
B) Yes, so long as she continues to assume wage and price rigidity.
C) Yes, if she also adopts the assumption of wage and price flexibility.
D) Yes, if she assumes that economic policy shifts are anticipated in advance.
B
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Javier lost his job as a chemical engineer when the company he worked for shut down, so he took a full time job as a convenience store clerk to help pay the bills. Javier is now considered
A) a discouraged worker. B) underemployed. C) unemployed. D) out of the labor force.
A federal surplus is deflationary when all else is held constant
Indicate whether the statement is true or false
Today John says, "I will start working out tomorrow." Yet as tomorrow arrives, he doesn't. This is an example of
A) time inconsistent preferences. B) time consistent preferences. C) exponential discounting. D) future-biased preferences.
If an employer cannot distinguish the ability of workers, a separating equilibrium will result
Indicate whether the statement is true or false