Suppose you need an estimate of future inflation (to decide, for example, whether a particular security is a good investment). How might you formulate a rational expectation?
What will be an ideal response?
A rational expectation is a best possible guess using all available information. Since any prediction is prone to error, the best strategy is to collect several predictions and, as much as possible, assess the plausibility of the underlying methods, paying particular attention to assumptions about future economic conditions.
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Since the 1970s, the Phillips curve has:
a. remained stable. b. moved in a clockwise direction. c. been unstable. d. been used as a reliable model to guide public policy.
Which of the following is true?
a. Markets determine what goods are going to be produced, but not the distribution of output among members of society. b. Markets determine the distribution of output among members of society, but not what goods are going to be produced. c. Markets determine both what goods are going to be produced and the distribution of output among members of society. d. Government can redistribute income without changing what will be produced in a society.
A book that sells new for $100 will typically sell used for around
A. $100. B. $75. C. $50. D. $25.
In? long-run equilibrium, the perfectly competitive firm will
A) go out of business.
B) produce to the point at which marginal cost is at its minimum.
C) produce to the point at which marginal cost equals average total cost.
D) produce on the upward sloping portion of its ATC curve.