If people behave as the rational expectations school thinks they do, one result is that adjustments in real output to monetary and fiscal policy changes are
A. smaller.
B. larger.
C. less predictable.
D. in the opposite direction from that predicted by standard analysis.
A. smaller.
You might also like to view...
Using the CPI to compensate workers for inflation is appropriate because, in the face of a change in relative prices, people should be allowed to purchase the same bundle as they did before the price changes
Indicate whether the statement is true or false
Assume (other things constant) that the Fed increases the money supply. The mechanism through which aggregate demand increases is, according to interest-rate-based transmission mechanism, summarized as follows:
A) the money supply increases ? there is a drop in money balances held ? interest rates increase ? planned investment spending decreases ? aggregate demand increases. B) increase in money supply ? increase in money balances held ? decrease in interest rates ? decrease in planned investment spending ? increase in aggregate demand. C) increase in money supply ? decrease in money balances held ? decrease in interest rates ? increase in planned investment spending ? increase in aggregate demand. D) increase in money supply ? decrease in interest rates ? increase in planned investment spending ? increase in aggregate demand.
The four important characteristics that define a perfectly competitive market are:
A. standardized good, full information, no transactions costs, participants are price takers. B. standardized information, finished good, no transactions costs, participants are price makers. C. standardized good, same information for buyer and seller, low transactions costs, participants are price takers. D. standardized good, full information, no transactions costs, participants are price makers.
What level of daily income is the World Bank's measure of extreme poverty?
A. $1.00 B. $1.90 C. $2.25 D. $3.00