People combining the effects of past policy changes on important economic variables with their own judgment about the future effects of current and future policy changes is consistent with

A) frictional unemployment.
B) the rational expectations hypothesis.
C) active policy making.
D) passive policy making.


B

Economics

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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.

A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline

Economics

A bank has no excess reserves. Then it receives a new deposit for $100,000. If it has a desired reserve ratio of 20 percent, by how much can it increase its loans?

A) $20,000 B) $80,000 C) $120,000 D) $180,000

Economics

Discuss the trends and implications of the following graph, especially with respect to the official start of the EMU on January 1, 1999

What will be an ideal response?

Economics

If an exhaustible resource is priced at marginal cost that remains constant over time, then

A) all owners of that resource earn rent. B) the price will stay constant over time. C) the percent price increase each year equals the rate of interest. D) the good is relatively scarce.

Economics