Economists of the rational expectations school:
a. have no confidence in the ability of workers and firms to observe and react to economic events
b. believe workers and firms behave the same regardless of what the Fed does.
c. have great faith in the ability of monetary policy makers to maintain a full employment economy with stable prices.
d. believe that effective monetary policy can shift the potential level of output to the right.
e. believe workers and firms make decisions based on what they think monetary policy will be in the future.
e
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Which of the following is one of the most important benefits of money in an economy?
a. Money allows for the exchange of goods and services. b. Money allows for the accumulation of wealth. c. Money makes exchange easier, leading to more specialization and higher productivity. d. Money encourages people to produce all of their own goods (self-sufficiency) and therefore increases economic stability.
When the price faced by a competitive firm was $5, the firm produced nothing in the short run. However, when the price rose to $10, the firm produced 100 tons of output. From this we can infer that
A) the firm's marginal cost curve must be flat. B) the firm's marginal costs of production never fall below $5. C) the firm's average cost of production was less than $10. D) the firm's total cost of producing 100 tons is less than $1000. E) the minimum value of the firm's average variable cost lies between $5 and $10.
Andy observes that the income distribution between the richest and poorest people in the population has remained fixed for decades. He concludes that the rich stay rich and the poor stay poor. Is this a valid conclusion, or has Andy missed something?
In the past few years the demand for donuts has greatly increased. This increase in demand might best be explained by:
A. an increase in the cost of making donuts. B. a change in buyer tastes. C. an increase in the price of coffee. D. consumers expecting donut prices to fall.