The proponents of rational expectations believe that:
A. there will be a substantial time lag before people anticipate the eventual effects of a shift to a more expansionary macro-policy.
B. macro-policies that stimulate demand and place upward pressure on the general level if prices will temporarily increase output and employment.
C. the inflationary side effects of expansionary policies will be anticipated quickly, and therefore, even their short-run effects on real output and employment will be minimal.
D. discretionary changes in macro-policy can be made in a manner that will reduce the economic ups and downs of a market economy.
Answer: C
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Increased international trade reduces the demand for a country's products that are produced more efficiently abroad (import-competing products). This increase in trade ________ the demand for workers in import-competing industries, and ________ their wages.
A. decreases; increases B. increases; increases C. decreases; decreases D. increases; decreases
A firm in monopolistic competition can determine what price to charge for its product because of
A) barriers to entry. B) economies of scale. C) product differentiation. D) the fact there are many buyers.
From the mid 1980s to the present, the United States
a. had only a small current account deficit. b. had a large capital account deficit, which in the balance of payments accounts was financed with a surplus in the current account, which in turn financed investment in excess of domestic saving. c. has had a large current account deficit, which in the balance of payments accounts was financed with a surplus in the capital account, that in turn financed investment in excess of domestic saving. d. None of the above
Tax incidence is affected by the:
A. Gini coefficent and poverty levels B. Price elasticity of demand and supply for a product C. Lorenz curve predictions about taxation