According to the rational expectations hypothesis, the attempt by the government to reduce unemployment below its natural rate through expansionary policies will
A. succeed because the government knows how people will react to their policies and will adjust their policies accordingly.
B. succeed in the short run and can succeed in the long run as long as the government makes it clear what its goals are.
C. fail because the economy can never achieve an unemployment rate below the natural level.
D. fail because people will figure out what the government is doing and alter their expectations and their behavior in ways that counteract the government policy.
Answer: D
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Refer to Figure 22.3 at quantity level B
A. Marginal cost is greater than marginal revenue, so it should cut production. B. Marginal revenue is greater than marginal cost, so the firm should expand production. C. The company is minimizing loss. D. The company is maximizing profit.
In an open economy, net exports will be equal to which of the following?
A) X - IM/? B) T - G C) DD D) Z E) S - I
Refer to Scenario 1.1 below to answer the question(s) that follow.SCENARIO 1.1: An economist wants to understand the relationship between minimum wages and the level of teenage unemployment. The economist collects data on the values of the minimum wage and the levels of teenage unemployment over time. The economist concludes that a 1% increase in minimum wage causes a 0.2% increase in teenage unemployment. From this information he concludes that the minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment among teenagers.Refer to Scenario 1.1. The statement that a 1% increase in the minimum wage causes a 0.2% increase in teenage unemployment is an example of
A. positive economics. B. equity. C. Ockham's razor. D. normative economics.
If price were increased from $25 to $26 and quantity demanded fell from 10 to 9, calculate elasticity; state whether demand is elastic, unit elastic, or inelastic; and find out how much total revenue was when price was $25 and $26.
What will be an ideal response?