The theory of adaptive expectations points out that when a shift in aggregate demand occurs, people and businesses will rationally expect its impact on output and employment to be temporary and its impact on the price level to be permanent
a. True
b. False
Indicate whether the statement is true or false
True
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If a monopolist faced a downward sloping average cost curve that lies fully above market demand, he will not produce if he can only charge a single per-unit price, but it would also be inefficient for him to produce.
Answer the following statement true (T) or false (F)
The primary purpose of the Federal Open Market Committee (FOMC) is to: a. set reserve requirements
b. extend loans to member banks of the Fed. c. buy and sell government securities. d. distribute Federal Reserve notes. e. enforce bank regulations.
Any change in spending from ________ will also change aggregate demand.
A. households B. firms C. the foreign sector D. All of these
(Last Word) Classical macroeconomics was dealt severe blows by:
A. the Great Depression and Keynes's macroeconomic theory. B. the Second World War and the writings of Milton Friedman. C. Adam Smith and his idea of the invisible hand. D. the strong recovery after the Second World War and Alvin Hansen's stagnation thesis.