According to rational expectations theory, the cause of observed instability in the private economy would most likely be due to:
A. Changes in aggregate supply
B. Inappropriate monetary policy
C. The instability of investment spending in the economy
D. Unanticipated aggregate demand and aggregate supply shocks in the short run
D. Unanticipated aggregate demand and aggregate supply shocks in the short run
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As workforces become more educated in countries with comparative advantages in labor-intensive products, cheap labor becomes:
A. less abundant relative to skilled labor. B. more abundant relative to skilled labor. C. more abundant relative to capital. D. None of these is true.
The belief that the government can do absolutely nothing in either the short run or the long run to reduce the unemployment rate, because people will anticipate the government's actions, is held by the:
a. rational expectations school. b. neo-Keynesian school. c. classical school. d. supply-side school. e. Keynesian school.
The most important economic concept to consider when deciding whether to produce a product domestically or import the product is
A. law of supply. B. law of demand. C. opportunity cost. D. law of increasing cost.
The classical economists assumed that
A) wages and prices were inflexible, especially downward. B) government intervention in the economic system was necessary and helpful. C) monopoly was widespread in the economy. D) wages and prices were flexible.