Rational expectations theory considers the aggregate:
A. Demand curve to be vertical
B. Supply curve to be vertical
C. Supply curve to be horizontal
D. Demand curve to be horizontal
B. Supply curve to be vertical
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If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output. B. lower price level and lower level of output. C. higher price level and higher level of output. D. lower price level and higher level of output.
The concept of opportunity cost is based on the principle of
A. scarcity. B. profit. C. need. D. consumption.
The case for advertising includes the idea that
A. it creates wants that otherwise would not have existed. B. firms spend large sums of money to create meaningless differences among products. C. it can promote competition. D. it adds to society's scarce resources.
Price controls would ordinarily be used to increase rather than decrease prices of depletable resources
a. True b. False Indicate whether the statement is true or false