According to the theory of rational expectations, the government can influence output
A. with appropriate fiscal and monetary policy.
B. in the short run, but not in the long run.
C. without affecting the price level.
D. only by making unexpected changes in aggregate demand.
Answer: D
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The tables above give the purchases of an average consumer in a small economy. (These consumers purchase only shampoo and pizza.) Suppose 2015 is the reference base period
a) What is the cost of the CPI basket in 2015 and 2016? b) What is the CPI in 2015 and in 2016? c) What is the inflation rate between 2015 and 2016?
It is not true in the long run of monopolies that
A. other firms seeking positive economic profit enter the market. B. they earn positive economic profit. C. they sell their output at a price greater than marginal cost. D. they benefit from barriers to entry.
Variable tolls on roads
a. are politically unpopular because people do not like the idea of paying for a good that they used to consume without paying for it directly. b. rise when traffic volume increases to ensure the speed on the road is kept high. c. are an effective way of correcting the common resource problem on roads. d. All of the above are correct.
To see if the effect of an explanatory variable has changed over a certain time period, we can interact the time dummy with that variable.
Answer the following statement true (T) or false (F)