While much of New Classical macroeconomics is being refuted by the evidence, at least one part of it may be a permanent legacy to all macroeconomists: the assumption of
A) continuous clearing of all markets.
B) rational expectations.
C) the unimportance of nominal variables.
D) supply shocks as the main cause of business cycles.
B
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The above figure shows the relationship between the price of a slice of pizza and how many slices of pizza Ricardo buys in a week. Between points A and B, the slope of the line equals
A) -5. B) -4. C) -3. D) -1. E) -2
In the long run, following a combination of a negative demand shock and a temporary negative supply shock, ________
A) both inflation and output return to the original long-run equilibrium values B) inflation is permanently increased, while output returns to potential output C) output returns to potential output, while inflation may be higher or lower than its initial value D) inflation is permanently reduced, while output returns to potential output E) none of the above
The holdout problem occurs when _____
a. unanimity rule is required for any Congressional action b. free riding is prevalent c. individuals drafted into the military refuse to report d. any individual has the power to prevent collective action
Good decisions meet many criteria, which of the following is not a main one
a. Quality b. Acceptance c. Flexibility d. Risk