What is the difference between adaptive expectations and rational expectations?
What will be an ideal response?
Adaptive expectations is when investors expectations of the price of a firm's stock depended only on past prices of the stock. With rational expectations, people make forecasts using all available information.
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If a product has zero external costs, then marginal social cost equal marginal private cost
Indicate whether the statement is true or false
When a transaction takes place repeatedly, then one way to signal to avoid information asymmetry is:
A. building a reputation. B. screening. C. statistical discrimination. D. Any of these could be true.
When a profit-maximizing firm in a monopolistically competitive market is in long-run equilibrium, marginal cost must lie below average total cost
a. True b. False Indicate whether the statement is true or false
In the long run, a decrease in government spending, other things equal, generates
A. a higher real GDP in the short run. B. both a higher real GDP and a lower price level. C. a lower real GDP in the long run. D. a lower price level.