The adaptive expectations theory suggests that:
a. the price level that people expect in the future is based on the behavior of prices in the past.
b. the unemployment rate adapts immediately to the inflation rate.
c. people have perfect foresight and always predict future price levels correctly.
d. people use all current information available to formulate their inflation expectations.
e. people react spontaneously to price level changes and do not consider any past or present information.
a
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If firms in a monopolistically competitive industry are operating with positive economic profit, over time we would see
A) firms alter their advertising rates until they made at least normal profits. B) some firms entering the industry, causing the market supply curve to shift to the right, lowering price. C) some firms entering the industry, causing the demand curves of the existing firms to shift to the left. D) some firms entering the industry, causing the demand curves of the existing firms to shift to the right.
Economic profit affects:
A. the allocation of resources but not the level of resource use. B. the level of resource use but not the allocation of resources. C. the allocation of resources and the level of resource use. D. neither the allocation of resources nor the level of resource use.
Refer to the information provided in Figure 33.2 below to answer the question(s) that follow.
Figure 33.2Refer to Figure 33.2. England has
A. a comparative advantage in producing cars. B. no comparative advantage in producing either cars or trucks. C. a comparative advantage in producing trucks. D. an absolute advantage in producing cars.
Bonds with relatively high risk of default are called
A) Brady bonds. B) junk bonds. C) zero coupon bonds. D) investment grade bonds.