What do economists mean when they characterize households and firms as forward looking?
What will be an ideal response?
Economists assume that both consumers and firms consider the future in making consumption and investment decisions today. Consumers make decisions about allocating consumption over a lifetime, while firms make investment decisions based on expectations about future profitability.
You might also like to view...
Keynesians believe in a relatively stable __________ curve, and thus recommend a monetary policy targeting the __________
A) IS; money supply B) IS; interest rate C) LM; money supply D) LM; interest rate
An increase in the government budget deficit shifts the supply of domestic currency in the market for foreign exchange to the right
a. True b. False Indicate whether the statement is true or false
Monopolists can practice price discrimination in all monopoly markets
a. True b. False Indicate whether the statement is true or false
In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits
a. diseconomies of scale because total cost is rising as output rises. b. constant returns to scale because average total cost is constant as output rises. c. diseconomies of scale because average total cost is rising as output rises. d. economies of scale because average total cost is falling as output rises.