Which of the following groups believes that the private sector takes actions based on rational expectations to offset policy actions?
A. New classical economists.
B. Keynesians.
C. Marxists.
D. Supply-siders.
Answer: A
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Given that the market wage rate is $50 and both the labor and the goods market are perfectly competitive, a profit-maximizing firm should hire an additional worker if:
A) the marginal product of the worker is 50 units. B) the value of marginal product of the worker is at least $50. C) the marginal product of the worker is less than 50 units. D) the value of marginal product of the worker is less than $50.
The nominal interest rate is approximately equal to the real interest rate minus the inflation rate
Indicate whether the statement is true or false
The IS curve slopes upward because
a. as income rises, savings rise and consumption falls, decreasing output. b. as interest rates rise, the money supply rises, increasing output. c. as interest rates rise, planned investment must fall, increasing output. d. as income increases, money demand rises, which increases interest rates.
Warrantees do not contribute to market power
Indicate whether the statement is true or false