A macroeconomic policy action will have a longer-term effect on aggregate demand if people
A. have habit formation in consumption.
B. have rational expectations.
C. have rational inattention.
D. update the way they make decisions frequently.
Answer: A
You might also like to view...
What do the foreign leaders investing in the industrial enclaves of developing countries of today have in common with those foreign investors who helped colonize North America?
(a) Both sets of leaders exploit the labor of the indigenous people. (b) Both expect to make personal and business sacrifices, take on risks and gain something of high expected value. (c) Both are driven primarily by their desires to extract materials for high profits. (d) Both strive to boost agricultural profits in international markets in the developing countries in which they invest.
Which of the following statements is TRUE about the long-run and short-run aggregate supply curve in the classical model?
A) The long-run aggregate supply curve is vertical, and the short-run curve is horizontal. B) The long-run aggregate supply curve is not defined, and the short run curve is vertical. C) The long-run and short-run curves start out horizontal and eventually become vertical. D) The long-run curve is vertical, and there is no short-run curve since all adjustments occur quickly.
In the long run, if some monopolistically competitive firms are earning economic losses then
A) firms will leave the industry. B) raise prices until they earn economic profits. C) they will increase production until marginal costs fall. D) new firms will enter the industry.
When the marginal and average products of labor are equal to each other, the
A) average product must be at its maximum value. B) marginal product must be at its maximum value. C) total product must be at its maximum value. D) None of the above answers is correct