Most economists reject the theory of rational expectations because
A. expectations adjust very quickly.
B. workers receive wage increases in advance of inflation.
C. the short-run aggregate supply curve is vertical.
D. labor contracts tend to embody past inflation rates.
Answer: D
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The costs of ensuring that the parties live up to the promises they made in bargaining are called
A) search costs. B) collectivization costs. C) negotiation costs. D) monitoring and enforcement costs.
Which of the following statements about economic resources is true?
A) Economic resources include financial capital and money. B) All economic resources are man-made. C) Economic resources are also called factors of production. D) Economic resources are used only by businesses.
If government regulations increase the cost of producing gasoline while at the same time government regulations reduce the cost of driving a relatively inefficient sport utility vehicle (SUV),
A) the supply of gasoline is expected to increase. B) the demand for gasoline is expected to decrease. C) the price of gasoline is expected to increase, whereas the total consumption of gasoline can increase, decrease, or stay the same. D) the supply of gasoline is expected to decrease.
Answer the following statements true (T) or false (F)
1) Vertical integration can increase and decrease a firm's costs. 2) If all stages of production occur within a vertically integrated firm, the firm has no taxable transactions during production. 3) Costs incurred in imposing compliance with a contract between an upstream firm and a downstream firm are considered to be monitoring costs. 4) If an upstream firm and a downstream firm have a long-term contract regarding the price of an input, a change in the market price of the input can result in either the upstream or downstream firm to incur an opportunity cost. 5) If the vertical integration between two firms creates greater managerial diseconomies than cost savings, the merger will increase the combined firm's overall costs.