Under the adaptive expectations hypothesis, how will a shift to a more expansionary monetary policy affect the economy?
a. In the short run, the real rate of output will be unaffected, but in the long run, it will increase.
b. In the short run, the real rate of output will increase, but in the long run, it will be unchanged.
c. There will be a permanent increase in the real rate of output, but the inflation rate will also be a little higher.
d. In the short run, the impact on the real rate of output is uncertain, but in the long run, output will increase.
B
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Refer to Figure 4-15. For each unit sold, the price sellers receive after the tax (net of tax) is
A) $20. B) $22. C) $27. D) $32.
A corporation may be reluctant to raise capital by issuing stock because
A. issuing stock to obtain money for investment is riskier than selling bonds. B. holders of already-existing stock will gain more voting power in the corporation. C. obtaining government permission to issue stock can be time-consuming and expensive. D. All of these responses are correct.
Economic losses in a market cause ______.
a. supply increases leading to increased prices. b. supply increases leading to decreased prices. c. supply reductions leading to increased prices d. supply reductions leading to decreased prices.
The diamond-water paradox occurs because:
A. the price of a product is related to its total utility, not its marginal utility. B. the price of a product is related to its marginal utility, not its total utility. C. water is, in fact, very scarce in certain regions of the world. D. diamonds are more useful than water.