The new Keynesians emphasize the importance of
A) rational expectations.
B) the monetary growth rule.
C) real causes of the business cycle.
D) sticky wages and prices.
Answer: D
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
An example of the command-and-control approach to environmental policy is:
a. allowing individuals to sue freon producers if CFC emissions exceed a government-set standard. b. allowing coal producers to buy and sell permits to allow CFC emissions. c. placing a tax on freon to reduce its use and the corresponding CFC emissions (which contribute to the ozone hole). d. none of these.
According to rational expectations theory, what information do businesses and workers use when they form their expectations regarding inflation?
a. Recent events and data. b. Keynesian and monetarist models. c. Forecasts by public-and private-sector economists. d. All the relevant information that is available.
Why do Federal Reserve Board of Governors have long (14 year) terms?