The New Keynesian model, is Keynesian in that ________
A) it assumes wages and prices are sticky
B) changes in the money supply are taken to be the single most important influence on business movements
C) the velocity of money is a constant
D) expectations are assumed to be rational
A
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Which of the following is not an example of inflation causing a redistribution of income because the inflation was unexpected?
A) Firms have to hire extra workers to change prices because of inflation. B) A firm signs a 4-year contract with a union based on a 3% expected rate of inflation per year, and the actual inflation rate ends up being 5% per year. C) An employee receives an increase in salary that is less than the rate of inflation because management under-predicted inflation. D) A bank collects a lower amount of interest from a loan because inflation was predicted to be 2% but was actually 4%.
Fred has decided to buy a burger and fries at a restaurant, but is considering whether to buy a drink as well. If the price of a burger is $3, fries are $2, and drinks are $1, but a value meal with all three costs $4.80, the marginal cost to Ted of the drink is:
a. $-0.20 b. $0.20 c. $0.80 d. $1.00
long term contracts are less likely when
What will be an ideal response?
What agreement has been reached to reduce the moral hazard problem and what does it require?
What will be an ideal response?