Believers in fixed rules maintain that
A. with accurate forecasts, we can see inflation coming at least one year ahead of time.
B. the length of stabilization lags is not important because fiscal policy actions are taken quickly and the economy feels the effect on aggregate demand quickly.
C. we should forget about discretionary policy and put the economy on autopilot, relying instead on automatic stabilizers and the economy’s self-correcting mechanism.
D. the economy’s self-correcting mechanism is slow and not very reliable, even with automatic stabilizers.
Answer: C
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The volatility of stock prices, particularly in the short-run, may, according to Professor S. Grossman, be due to
a. large numbers of stockholders fearful of losing wealth who sell at some predetermined level. b. some traders being better informed than others about real financial conditions. c. either or both of the above. d. the increasing use of stock options as compensation for corporate executives.
Last year Christine worked as a consultant. She hired an administrative assistant for $15,000 per year and rented office space (utilities included) for $3,000 per month. Her total revenue for the year was $100,000. If Christine hadn't worked as a consultant, she would have worked at a real estate firm earning $40,000 a year. Last year, Christine's accounting profit was ________ and her economic profit was ________.
A. $64,000; $49,000 B. $100,000; $64,000 C. $9,000; 0 D. $49,000; $9,000
If output is below the full-employment level of output, we should expect wages to increase over time
a. True b. False
Firms in a competitive market are said to be price takers because there are many sellers in the market, and the goods offered by the firms are very similar if not identical
a. True b. False Indicate whether the statement is true or false