Two key assumptions of new Keynesian theory include:
A) (1 ) people hold rational expectations, and (2 ) wages and prices are not completely flexible in the short run.
B) (1 ) people hold adaptive expectations, and (2 ) wages and prices are inflexible.
C) (1 ) people hold rational expectations, and (2 ) wages and prices are flexible.
D) (1 ) people hold neither adaptive nor rational expectations and (2 ) prices are inflexible.
E) none of the above
A
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From 1991 until 2001, the United States was in a period of
A) business cycle peaks. B) expansion. C) recession. D) business cycle troughs.
Which is NOT an example of moral hazard
a. people eat less at all-you-can-eat buffets b. loggers clear-cut a tract of land when paying a fixed price rather than when paying per tree felled c. Drivers of heavier, safer cares are more likely to run stop signs d. workers on commission work harder than those paid an hourly wage
Suppose the required reserve ratio is 0.15. Total bank deposits are $100 million and the bank holds $20 million in reserves. How much more money can the bank create if it does not hold excess reserves?
A. $100 million B. $33 million C. $667 million D. $66 million
A positive cross-price elasticity between two goods implies that the two goods are substitutes.
Answer the following statement true (T) or false (F)