Which of the following models has as its central idea that workers and firms have rational expectations?
A) the monetarist model
B) the new classical model
C) the real business cycle model
D) the new Keynesian model
Answer: B
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Suppose a tax equal to the value of the marginal external cost at the optimal output is imposed on a pollution generating good. All of the following will result from the tax except
A) an increase in demand for the good. B) a decrease in the equilibrium quantity produced and consumed. C) an increase in the equilibrium market price. D) a decrease in market supply of the good.
If Mexico imports more than it exports to Canada, this contributes to
a. a favorable balance of trade for Mexico b. an unfavorable balance of trade for Canada c. Canadians having to borrow pesos from the foreign exchange market d. Mexicans buying assets in Canada e. a favorable balance of trade for Canada
If the underground economy is sizable,
The United States imports heavily in all of the following markets except
A. Aluminum. B. Coffee. C. Chromium. D. Aircraft.