The theory of "rational expectations" is most closely associated with __________ economists
A) Classical
B) Keynesian
C) Monetarist
D) New Classical
D
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Draw a graph to illustrate the effect of an increase in demand on the price and quantity in a market
What will be an ideal response?
If participants in securities markets believe that an announced decrease in the money supply will reduce the rate of inflation, the likely result will be
A) higher real interest rates. B) higher nominal interest rates. C) lower real interest rates. D) lower nominal interest rates.
The marginal propensity to consume out of income
A) is larger than one. B) is equal to one. C) is smaller than one. D) varies around one.
Jeff holds $50,000 wealth which has a utility of 7.07 utils (assuming utility is the square root of wealth in thousand dollars). He considers investing this in a gamble which has a 0.6 probability of increasing his total wealth to $100,000 and 0.4 probability of decreasing it to $30,000 . What will be Jeff's expected utility from the gamble?
a. 15 utils b. 8.19 utils c. 3.2 utils d. 12.12 utils