The Lucas supply function, in combination with the assumption that expectations are rational, implies that an announced change in monetary policy affects
A. the actual price level, but not the expected price level.
B. both the actual price level and the expected price level.
C. the expected price level, but not the actual price level.
D. neither the actual price level nor the expected price level.
Answer: B
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Refer to the above figure. Mario is self-sufficient and so is Mia. Each produces 6 dishes of pasta and 4 pizzas. Mario and Mia decide to specialize and trade
After they have specialized and traded, compared to the initial situation, Mia's opportunity cost of pasta has ________ and Mario's opportunity cost of a pizza has ________. A) decreased, decreased B) decreased, increased C) increased, increased D) increased, decreased
For a firm to maximize total profits through price discrimination, it should
a. Firms should charge a low price to high-value consumers and a high price to low-value consumers b. Firms should charge a high price to high-value consumers and a high price to low-value consumers c. Firms should charge a low price to high-value consumers and a low price to low-value consumers d. Firms should charge a high price to high-value consumers and a low price to low-value consumers
If Brazil can produce 5 shirts or 4 pounds of beef in a day, and Uruguay can produce 10 shirts or 2 pounds of beef in a day, then Brazil has a comparative advantage in the production of beef
a. True b. False Indicate whether the statement is true or false
The theory of rational expectations concludes that
A. by reacting to the expected effects of a stabilization policy, the public will tend to negate the impact of that policy. B. the public's expectations as to the effects of economic policies will tend to reinforce the effectiveness of those policies. C. the public's expectations can influence the outcome of fiscal policy, but not of monetary policy. D. the public's expectations can influence the outcome of monetary policy, but not of fiscal policy.