Which of the following is true about rational expectations?
a. People form expectations on the basis of information about past as well as future actions of policy makers.
b. Wage agreements do not reflect inflationary expectations if workers expect continued inflation
c. Rational people cannot easily anticipate the effects of discretionary policy on the price level and output.
d. The role of expectations is applicable in the context of monetary policy only.
e. The effectiveness of a particular government policy is independent of people's expectations.
a
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Monetary policy refers to the actions taken by the Treasury Department to set the level of the money supply
Indicate whether the statement is true or false
Increases in the quantity of money can start a ________ inflation, and an increase in government expenditure can start a ________ inflation
A) demand-pull; demand-pull B) demand-pull; cost-push C) cost-push; cost-push D) cost-push; demand-pull E) None of the above is correct because increases in the quantity of money are necessary to continue an inflation but cannot start an inflation.
The above table gives techniques that Fatz confectionery can use to produce 2,000 pounds of candy
If the cost of capital is $20 per unit and the cost of labor is $40 per unit, the economically efficient technique for producing 2000 pounds of candy is A) A. B) B. C) C. D) D.
Refer to Figure 2-6. If the economy is currently producing at point A, what is the opportunity cost of moving to point B?
A) 6 thousand hammers B) 30 thousand wrenches C) 23 thousand hammers D) 8 thousand wrenches