Most economists reject the theory of rational expectations because
a. expectations adjust very quickly.
b. workers receive wage increases in advance of inflation.
c. the short-run aggregate supply curve is vertical.
d. labor contracts tend to embody past inflation rates.
d
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According to traditional Keynesians, monetary policy as a tool to fight a recession
A) is very effective because interest rates will fall immediately. B) has an uncertain effect on the economy, depending on the direction of fiscal policy. C) is ineffective because interest rates will not fall. D) cannot be determined because traditional Keynesians do not consider monetary policy at all.
The real interest rate has a positive relationship with the supply of loanable funds
Indicate whether the statement is true or false
In general, the accounting of trade in goods and capital is known as the:
A. balance of trade. B. net capital outflow. C. balance of payments. D. trade surplus.
A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease