Discuss some of the implications of rational expectations
What will be an ideal response?
Answers should include a discussion of the implications of rational expectations on: (1 ) our understanding of the behavior of consumption and financial market variables; (2 ) the determinants of wage and price setting behavior; and (3 ) the theory, implementation, and effectiveness of policy.
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The labor demand curve of a firm
A. is the same as its marginal product curve. B. reflects a direct relationship between the number of workers hired and the money wage rate. C. is perfectly elastic if the firm is selling its product in a purely competitive market. D. will shift to the left if the price of the product the labor is producing falls.
What is a supply shock, and why might a supply shock lead to stagflation?
What will be an ideal response?
Refer to the graph shown. If this monopolist were forced to set price equal to average cost, it would charge a price of:
A. $8. B. $3. C. $12. D. $2.
A budget-constrained public enterprise may behave quite differently when entry is barred than it would when new entry is allowed
Indicate whether the statement is true or false