Which of the following is NOT an inference of the rational expectations hypothesis?
A. Government policy actions that are anticipated have no real effects in the short run.
B. Government policy actions have no real effects in the short run unless the actions are unanticipated.
C. Government policy actions have no real effects in the long run.
D. Government policy actions that are unanticipated have no monetary effects in the short run.
Answer: D
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Exactly what is a "sunk cost"?
A) A decision somebody regrets having made B) A mistaken choice C) Unrecoverable costs D) A cost that haunts you for the rest of your life
Assuming that the total market size remains constant, a monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing in the long run because
A) some of its customers have switched to purchasing the products of new entrants in the market. B) as the firm raises its price in the long run, it will lose some customers to new entrants in the market. C) its costs of production rises. D) new entrants into the market are more likely to have cutting edge products.
An intermediate good is a good that is
A) neither normal nor inferior. B) used as an input. C) a stand-in for all goods. D) is tangible good that includes substantial services.
An economy that is producing on the production possibility frontier at some point other than the output of efficient allocation is
A. inefficient, as the combination of goods and services produced is not what people want. B. inefficient, as that combination of goods could be produced at a lower cost if more efficient technology were employed. C. efficient, as the economy is producing goods at the lowest possible cost. D. efficient, as it is on the production possibility frontier.