A prediction based on rational expectations ________
A) relies solely on past experience
B) will always be superior to one based on adaptive expectations
C) is based on real, rather than nominal variables
D) will not always be accurate
D
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In the Keynesian cross diagram, a decline in autonomous consumer expenditure causes the aggregate demand function to shift down, the equilibrium level of aggregate output to ________, and the IS curve to shift to the ________,
everything else held constant. A) rise; left B) rise; right C) fall; left D) fall; right
What impact does an increase in price have on consumer surplus?
a. Increases it b. Decreases it c. Depends on the amount of the price change d. Will not affect consumer surplus
In practice, placing a price control on a natural monopoly:
A. always creates the same outcome as public ownership of the industry. B. is easy and commonly practiced. C. is difficult because of lack of information. D. is never a good idea.
In a market economy, producers will produce the goods and services that
A. Producers want to purchase. B. Consumers demand. C. Optimize producer utility. D. Consumers need the most.