If people have rational expectations, then they
a. are correct at least 50% of the time.
b. do not make systematic and correctable errors in prediction.
c. sometimes overestimate, but never underestimate, economic variables.
d. revise their expectations upward when their predictions are too low and downward when they are too high.
b. do not make systematic and correctable errors in prediction.
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Which of the following has a tendency to raise the unemployment rate?
A) reducing unemployment insurance in an economy B) offering wages at the market-clearing rate C) implementing a minimum wage in an economy D) reducing labor union membership in an economy
Two friends, Diane and Sam, own and run a bar. Diane tends bar on Monday, Wednesday, and Friday and receives a wage in addition to tips. Sam tends bar on Tuesday, Thursday, and Saturday and receives only tips. Which of the following represents an implicit cost of operating the bar?
a. Diane's wage. b. Sam's time. c. Diane's tips. d. Sam's tips. e. Both Diane's and Sam's tips.
Which of the following is not a characteristic of less-developed countries?
a. a focus on production of consumption goods b. low levels of investment in capital goods c. political instability d. a high percentage of the population under age 15 e. adequate infrastructure
Because it is generally difficult for economists to user experiments to generate data, what must they generally do?
a) do without data b) use whatever data the world gives them c) select a committee of economists to make up data for all economists to use d) use hypothetical, computer-generated data