According to rational expectations theory, what information do businesses and workers use when they form their expectations regarding inflation?
A. recent events and data
B. Keynesian and monetarist models
C. forecasts by public-and private-sector economists
D. all the relevant information that is available
Answer: D
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Firms that face downward-sloping demand curves for their output are called
a. perfectly competitive b. price takers c. price searchers d. resource price takers e. resource price searchers
If the nominal interest rate is 6.3 percent and the inflation rate is 7.2 percent, then the real interest rate equals:
a. - 13.5 percent. b. + 13.5 percent. c. - 0.9 percent. d. -7.2 percent. e. + 1.1 percent.
Which of the following best describes full employment?
(a) Less than 5% of the labour force is unemployed; (b) The level of employment in the economy is sustainable; (c) Employment and unemployment are at their "natural" rates; (d) All of the above could describe it.
A market exists for the sale and purchase of
a. Computer services. b. Nuclear warheads. c. Illegal drugs. D. All of the above.