According to rational expectations theory, predictable expansionary monetary and fiscal policies to reduce the unemployment rate are:
a. desirable because the result is to lower inflation.
b. harmful because the only result is higher inflation.
c. ineffective on the price level.
d. None of these.
b
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Fact: People use water for many different purposes, from drinking and cleaning to filling pools, balloons, and squirt guns. Economists acknowledge the multiple uses of water when they point out that
A) everybody needs water. B) water is a good with many alternative uses at the margin. C) the demand for water is completely inelastic—consumers are totally insensitive to changes in the price of water. D) nothing but water can be used to serve all the purposes water serves.
According to the World Bank, Albania does one of the worst jobs as a country enforcing the rule of law. The consequence of a weak rule of law is
A) strong property rights enforcement leading to greater investment. B) more risk taking on the part of entrepreneurs and greater economic investment. C) a decrease in cash transactions and increased efficiency. D) difficulty in attracting investment and low economic growth.
For which of the following market structures is it assumed that there are barriers to entry?
A) Perfect competition B) Monopolistic competition C) Monopoly D) all of the above E) B and C only
Economists generally prefer greater effort made to force internalization of externalities through taxes rather than using alternative approaches, such as establishing pollution standards
a. True b. False Indicate whether the statement is true or false