Which statement is TRUE when rational expectations exist and there is a change in monetary policy which is expected?
A. The change in monetary policy does not change equilibrium in either the short-run or long-run.
B. The change in monetary policy leads to a change in aggregate demand that leads to a temporary short-run equilibrium that is different from the long-run equilibrium.
C. The change in monetary policy lead to a simultaneous shift in the long-run aggregate supply curve.
D. The change in monetary policy leads to a simultaneous shift of the short-run aggregate supply curve.
Answer: D
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A stock is purchased either for the expected gain in the price of the stock, for the dividends that the stock may pay, or both.
Answer the following statement true (T) or false (F)
Identify the correct statement with respect to consumption and saving function
a. Both the consumption function and the saving function have negative slopes. b. As disposable income declines, consumption and saving increase. c. The consumption function has a negative slope while the saving function has a positive slope. d. As disposable income rises, consumption and saving increases. e. The consumption function has a positive slope while the saving function has a negative slope.
Policy makers should manage aggregate demand so that it grows in line with the economy's capacity to produce. This task is the realm of
a. growth policy. b. stabilization policy. c. labor policy. d. inflation policy.
Refer to the above graph for a profit-maximizing monopolist. The firm will set its price at:
