In the above figure, suppose the economy is in equilibrium at point A. The Fed engages in an expansionary monetary policy that is fully anticipated by the public. Other things being equal, what point represents the new equilibrium according to the rational expectations theory?
A. A
B. B
C. C
D. D
Answer: C
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A ________ is a plan by one firm to price a good at marginal cost forever if the other cheats on an agreement
A) pure strategy B) grim strategy C) patent D) collusion
Social Security benefits have played an important role in the improved economic status of the elderly over time.
A. True B. False C. Uncertain
If two goods are complementary, a(n):
a. decrease in the price of one product will cause a decrease in the demand for the other product. b. decrease in the price of one product will cause an increase in the demand for the other product. c. increase in the price of one product will cause an increase in the supply of the other product. d. increase in the price of one product will cause a decrease in the supply of the other product. e. increase in the price of one product will cause an increase in the demand for the other product.
Which of the following is the best example of an automatic stabilizer?
a. Welfare payments. b. Foreign aid c. Defense spending. d. Highway construction.