Describe and explain the policy irrelevance proposition
What will be an ideal response?
The policy irrelevance proposition is the conclusion that policy actions have no real effects in the short run if the policy actions were anticipated and none in the long run even if the policy actions were unanticipated. The conclusion comes from rational expectations hypothesis. Prices and wages are assumed to be flexible and people form their expectations on a rational basis.
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A firm is a monopoly if
a. it faces a demand curve for its product that equals market demand. b. it is a very large firm. c. it takes its rivals' actions into account when choosing its price and output levels. d. its production decisions do not affect the price of its product.
The ________ measure of money contains items that are not direct media of exchange, such as ________
A) M1, checkable deposits B) M1, savings certificates C) M2, checkable deposits D) M2, savings certificates
A major contribution of the Solow model is its ________
A) insight into what distinguishes rich economies from poor economies B) explanation of why productivity grows over time C) demonstration that the key to sustained growth is a high level of saving D) encouragement of policies to limit population growth
Given the information in Figure 14.4, the competitive wage rate is:
A) W1. B) W2. C) W3. D) W4. E) none of the above