The theory of rational expectations concludes that
A. since expectations can cause discretionary stabilization policies to be pro-cyclical, it is better to rely upon policy rules.
B. discretionary monetary policy is a more powerful stabilization device than is discretionary fiscal policy.
C. discretionary fiscal policy is a more powerful stabilization device than is discretionary monetary policy.
D. discretionary policies are more effective than rules in stabilizing the economy.
A. since expectations can cause discretionary stabilization policies to be pro-cyclical, it is better to rely upon policy rules.
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Which of the following would be classified as a fixed cost for the local supermarket?
A) The cost of the boxes of cereal sold in the store. B) The salary and any overtime paid the store's manager. C) The rent from the six-year lease for the building the store uses. D) The Social Security tax the store pays the federal government on the workers' income.
The richest American is ______.
Fill in the blank(s) with the appropriate word(s).
Which of the following groups believes that the economy will move toward and achieve equilibrium at full employment without inflation if government just keeps its hands off the economy?
a. classical school b. Keynesian school c. neo-Keynesian school d. rational expectations school e. supply-side school
Suppose an economy experience a 4% increase in each of the following variables: N, K, and H (human capital). Given this information, we know with certainty that
A) Y will increase by more than 4%. B) Y will increase by exactly 4%. C) Y will increase by less than 4%. D) Y will increase by less than 12% but by more than 4%. E) none of the above