The proponents of rational expectations believe that:
a. there will be a substantial time lag before people anticipate the eventual effects of a shift to a more expansionary macro-policy.
b. macro-policies that stimulate demand and place upward pressure on the general level if prices will temporarily increase output and employment.
c. the inflationary side effects of expansionary policies will be anticipated quickly, and therefore, even their short-run effects on real output and employment will be minimal.
d. discretionary changes in macro-policy can be made in a manner that will reduce the economic ups and downs of a market economy.
c
You might also like to view...
Suppose that in Slovakia one unit of labor can produce either 16 tons of wheat or 32 tons of soy and in Poland one unit of labor can produce either 4 tons of wheat or 2 tons of soy. Given this information, which of the following statements is true?
A. Slovakia has a comparative advantage in producing neither wheat nor soy. B. Slovakia has a comparative advantage in producing both wheat and soy. C. Poland has a comparative advantage in producing soy but not wheat. D. Poland has a comparative advantage in producing wheat but not soy.
Refer to Figure 7-4. With insurance and a third-party payer system, what price do consumers pay for medical services?
A) $25 B) $40 C) $55 D) >$55
Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.
A technological change would cause movement along the demand curve for inputs.
Answer the following statement true (T) or false (F)