Signals are believable when the cost of sending a
A) false signal is known to be low.
B) false signal is known to be high.
C) true or false signal is known to be low.
D) true signal is known to be high.
B
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Refer to the above figure. Suppose the economy is in long-run equilibrium at point A, and the government initiates an expansionary monetary policy to increase aggregate demand
Which of the following is a TRUE statement concerning the differences between what happens when the central bank action is unanticipated and when it is anticipated? A) The new long-run equilibrium will be point C in either case. When the increase in aggregate demand is unanticipated, the economy moves to B in the short run, but when the increase in aggregate demand is anticipated, short-run aggregate supply shifts when the aggregate demand curve shifts, and the economy moves immediately to point C. B) The new long-run equilibrium when the increase in aggregate demand is unanticipated is point B while the new long-run equilibrium when the increase in aggregate demand is anticipated is point C. C) The new long-run equilibrium is point C in either case. When the increase in aggregate demand is unanticipated, the new short-run equilibrium is point B, but when the increase in aggregate demand is anticipated the new short-run equilibrium is point D. D) The new long-run equilibrium when the increase in aggregate demand is unanticipated is point B while the new long-run equilibrium when the increase in aggregate demand is anticipated is point A.
If one tracks the prices of critical metals, like lead, zing, and copper, one sees that
A. they have risen more slowly than the general rate of inflation. B. they have risen about as rapidly as the general rate of inflation. C. the prices have fallen, indicating that consumers have found other alternatives. D. the prices have fluctuated too wildly to conclude anything.
Based on the graph showing the effects of an investment tax credit or a technological change, enacting an investment tax credit would ______.
a. create a negative real interest rate
b. have little or no effect on the real interest rate
c. increase the real interest rate
d. decrease the real interest rate
How did Milton Friedman define permanent income?
a) The present value of an individual's past incomes. b) The present value of an individual's future stream of income. c) The future value of an individual's past incomes. d) The future value of an individual's future stream of income.