When all relevant information is used to forecast inflation, the resulting forecast is called
A) a rational expectation.
B) a natural expectation.
C) an expected forecast.
D) an expansionary expectation.
E) the expected expectation.
Answer: A) a rational expectation.
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Which of the following represent expansionary fiscal policy?
A) an increase in marginal individual income tax rates B) an increase in average individual income tax rates C) a cut in corporate income tax rates D) a reduction in government spending
In a simultaneous game,
A) players have the benefit of seeing the moves of others before they make their moves. B) every player is looking forward and reasoning forward. C) one player has to go first. D) players do not have the benefit of observing the moves of other players before making their own.
In a "second-best" world
A. tariffs are economically optimal. B. private actions are dictated by government agencies. C. private actions do not lead to the best possible outcomes for society. D. social marginal cost of a transaction equals social marginal benefit.
An unregulated industry has a Lerner index of zero. These numbers:
A. reveal that social welfare would be improved by regulating the firms. B. are consistent with the industry being monopolistically competitive. C. reveal that social welfare would be improved by regulating the firms and are consistent with the industry being monopolistically competitive. D. are consistent with the industry being perfectly competitive.