Which of the following theories of expectations holds that individuals form expectations by looking only to past values of the variable to be forecast?
A. Rational expectations theory
B. Certainty equivalent theory
C. Expected value analysis
D. Adaptive expectations theory
D. Adaptive expectations theory
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In the United States, the strategy of monetary policy
a. has not changed even as the economic environment has varied. b. has been to target interest rates. c. has been to target the money supply. d. None of the above
Answer the following questions:
a. What is the equation of exchange? Explain each component. b. What assumptions are placed on the equation of exchange to generate the quantity theory of money? c. Explain the quantity theory of money and what it implies about the impact of changes in the money supply on real output and prices.
A depreciation of the South Korean won against the U.S. dollar will
A. Raise the dollar price of Korean goods. B. Lower the won price of Korean goods. C. Lower the dollar price of U.S. goods. D. Raise the won price of U.S. goods.
In the graph above, a government imposed price of $35 represents a price _____ and there is a _____.
A. floor; surplus
B. floor; shortage
C. ceiling; surplus
D. ceiling; shortage