According to the theory of adaptive expectations, if the inflation rate has been 4.2 percent for the last ten years, people will expect next year's inflation rate to be:
a. 4.2 percent.
b. higher than 4.2 percent.
c. lower than 4.2 percent.
d. 0; that is, they will expect no inflation.
e. 8.4 percent.
a
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The reduction in consumer and producer surplus that results from underproduction is called
A) an internal cost. B) a deadweight loss. C) a quantity loss. D) None of the above answers is correct.
An inherent weakness of ________ is the absence of the profit incentive
A) government-directed credit B) government-backed deposit insurance C) private loans D) prudential supervision
If the required reserve ratio is 10 percent, $1,000 cash deposited into a checkable deposit account will generate, assuming willing borrowers, an increase in the money supply of:
a. $900. b. $1,100. c. $9,000. d. $10,000. e. $11,000.
Following is a firm's expansion path. The price of capital is $5 per unit; the price of labor is $2 per unit. 
How much does the 10th unit of output add to long-run total cost?
A. $3 B. $40 C. zero D. $4 E. none of the above