The idea that economic agents do not make systematic errors because they use all information efficiently is called the
A) consistency hypothesis.
B) rational expectations hypothesis.
C) information efficiency hypothesis.
D) principle of maximizing behavior.
B
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An advantage of a negative income tax is that there are no disincentives to earning additional income
a. True b. False
Price elasticity of demand is calculated as
a. the percentage change in quantity demanded divided by the percentage change in price b. the percentage change in price divided by the percentage change in quantity demanded c. the absolute change in quantity demanded divided by the absolute change in price d. the absolute change in price divided by the absolute change in quantity demanded e. none of the above
Strategic behavior occurs when:
a. there are a large number of firms selling identical products. b. there is only one firm in the market. c. the firms have no command over the prices of the good they produce. d. the firms can take any decision irrespective of what their rival does. e. what is best for a firm depends on what his rival does.
The nominal interest rate is the
a. interest rate corrected for inflation. b. interest rate as usually reported by banks. c. real rate of return to the lender. d. real cost of borrowing to the borrower.