Extrapolative expectations work when prices are rising, but not when prices decline.
Answer the following statement true (T) or false (F)
False
Extrapolative expectations work in both directions, which is why asset prices rose so high and dropped so quickly just before the 2008/09 recession.
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According to the possible trade-off example between warships and drinking water in the text, the policy question that should be considered in Malaysia is
A) do the real costs of the warships exceed their nominal costs? B) do the opportunity costs of the warships exceed their nominal costs? C) do the benefits of the warships exceed their opportunity costs? D) do the nominal costs of the warships exceed their real costs?
The excess burden of a tax is also a deadweight loss
Indicate whether the statement is true or false
At the beginning of the fall semester, college towns experience large increases in their populations, causing a(n):
A. decrease in the quantity of apartments supplied. B. increase in the demand for apartments. C. increase in the supply of apartments. D. decrease in the quantity of apartments demanded.
Which of the following would cause an increase in M1?
A) a reduction in the required ratio of reserves to deposits B) an increase in the discount rate C) an open market operation where the Fed buys bonds D) all of the above E) none of the above