Which of the following statements is consistent with the rational expectations hypothesis?
A. When it comes to making personal economic decisions, people always behave in a rational manner.
B. When it comes to making personal economic decisions, people rarely behave in a rational manner.
C. Every person in the economy is always correct in her predictions about current and future policy changes.
D. People combine the effects of past policy changes on important economic variables with their own judgment about the future effects of current and future policy changes.
Answer: D
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Under U.S. antitrust law, a consent decree allows a firm to
a. admit to an antitrust violation without penalty b. admit to an antitrust violation without a lawsuit c. challenge the government's accusation in court d. cease the alleged wrongdoing without admitting guilt e. cease the alleged wrongdoing only by admitting guilt
Which of the following is a positive microeconomics statement?
A) The central bank should increase the nation's money supply. B) The increase in the nation's money supply helped push the nation's unemployment rate down in the short run. C) Ford Motor Company's new advertising campaign ended up hurting General Motors's sales. D) The local government ought to spend more on recreational activities.
Personal income taxes:
A. make recessions and inflationary episodes more severe. B. make recessions and inflationary episodes less severe. C. make recessions more severe and inflationary episodes less severe. D. make recessions less severe and inflationary episodes more severe.
At any point where a monopolist's marginal revenue is positive, the downward-sloping straight-line demand curve is:
A. perfectly elastic, as is the perfectly competitive firm's. B. elastic but not perfectly elastic, and a perfectly competitive firm's demand curve is perfectly elastic. C. elastic but not perfectly elastic, as is the perfectly competitive firm's. D. inelastic, while a perfectly competitive firm's demand curve is perfectly elastic.