According to the rational expectations theory, if all firms have rational expectations and wages and prices are flexible, disequilibrium in a market
A. will be a common occurrence.
B. will never exist.
C. will only be temporary.
D. will only exist in times of high inflation.
Answer: C
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Everything else held constant, changes in the interest rate affect planned investment spending and hence the equilibrium level of output, but this change in investment spending
A) merely causes a movement along the IS curve and not a shift. B) is crowded out by higher taxes. C) is crowded out by higher government spending. D) is crowded out by lower consumer expenditures.
Consumer surplus measures the benefit to buyers of participating in a market
a. True b. False Indicate whether the statement is true or false
Suppose that the market for labor is initially in equilibrium. If the firm employs labor-augmenting technology, the equilibrium wage
a. and the equilibrium quantity of labor will rise. b. and the equilibrium quantity of labor will fall. c. will rise, and the equilibrium quantity of labor will fall. d. will fall, and the equilibrium quantity of labor will rise.
Over time, technological change has:
A. reduced both the price elasticity and income elasticity of the demand for farm products. B. reduced the minimum efficient scale of production in agriculture and increased the prices of farm products. C. increased both price elasticity and income elasticity of the demand for farm products. D. increased the minimum efficient scale of production in agriculture and reduced the prices of farm products.