According to the rational expectations hypothesis, the attempt by the government to reduce unemployment below its natural rate through expansionary policies will
A) succeed in the short run and can succeed in the long run as long as the government makes it clear what its goals are.
B) succeed because the government knows how people will react to their policies and will adjust their policies accordingly.
C) fail because people will figure out what the government is doing and alter their expectations and their behavior in ways that counteract the government policy.
D) fail because the economy can never achieve an unemployment rate below the natural level.
C
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According to this Application, because Argentina pegged its currency to the U.S. dollar, the appreciation of the dollar caused a large trade deficit in Argentina. This trade deficit meant that
A) the demand for Argentinean pesos exceeded the supply of the pesos. B) the demand for Argentinean pesos exceeded the supply of U.S. dollars. C) the supply of Argentinean pesos exceeded the demand for the pesos. D) the supply of Argentinean pesos exceeded the demand for U.S. dollars.
When an economy produces at its allocatively efficient production point
A) scarcity is not a problem. B) resources are not limited. C) a society can increase the production of all goods. D) a society can increase the production of one good only by decreasing the production of some other good that is valued more highly.
Which of the following would be considered tax evasion?
a. deducting charitable contributions when figuring income taxes b. claiming your young children as tax exemptions c. claiming your dog as a dependent on your tax form d. buying a house in order to deduct interest payments e. overestimating your income subject to taxes
Bank of the Gulf has a required reserve ratio of 10 percent. It receives $180,000 in new deposits and then loans the excess reserves from this deposit to Kayla, who is building a new greenhouse. Kayla deposits the money into her checking account at Vulcan Bank until she needs it. How much money has Bank of the Gulf created?
a. $162,000 b. $18,000 c. $324,000 d. $180,000