Under the rational expectations hypothesis, if wages adjust rapidly to new information about intended policy actions, the only time that changes in government policies have real effects is when
A) the changes are unanticipated. B) the changes involve monetary policy.
C) the changes involve fiscal policy. D) the changes affect aggregate demand.
A
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The electric power company in a city increased its prices by 15% this year. Since the demand for electricity is a(n) ________ demand in the short run, the equilibrium price will ________.
A. inelastic; greatly increase B. elastic; decrease C. inelastic; decrease
If your firm's production function has constant returns to scale and you increase all your inputs by 60%, then your firm's output will
a. not change. b. increase, but by less than 60% c. increase by 60% d. increase by more than 60%.
Which of the following is a function of money?
(a) Unit of Account. (b) Store of Value. (c) Standard of Deferred Payment. (d) All of the above
Suppose that the long-run industry supply in the production of synthetic fabrics is perfectly elastic. Which of the following statements is then true?
a. The marginal cost curve of each synthetic-producing firm is horizontal. b. The existence of profit within the industry will not draw new firms into the market. c. The long-run industry supply for synthetics is horizontal. d. The long-run industry supply for synthetics is upward sloping.