If you were a rational expectations economist, you would argue that
a. there is absolutely nothing government can do, even in the short run, to reduce the economy's unemployment rate
b. the government can use fiscal policy such as increased government spending or lower tax rates to reduce unemployment but can do nothing about curbing inflation
c. Keynesian economic theory works only to reduce unemployment and can do nothing about curbing inflation
d. inflation is avoidable if government abandons its policy to create a zero rate of unemployment
e. market participants—demanders and suppliers—can be fooled in the long run by monetary and fiscal policy rules
A
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The unemployment rate
A) rises during times of rapid economic growth and falls during times of slow economic growth. B) rises during recessions and falls during booms. C) rises during booms and falls during recessions. D) tends to remain the same in booms and recessions.
The entity that issues a bond is called the
a. debtor b. creditor c. bond-issuing agent d. licensed bonder e. c and d
A country can consume outside its production possibilities curve by trading.
Answer the following statement true (T) or false (F)
When two goods are perfect substitutes, the marginal rate of substitution
a. decreases as the scarcity of one good increases. b. is constant along the indifference curve. c. changes to reflect the consumer’s changing preferences for the goods. d. increases as the scarcity of one good increases.