Answer the following statements true (T) or false (F)
1. Most economists today would agree with the view that "money doesn't matter" in macroeconomic theory.
2. Rational expectations theory allows for temporary changes in output due to expansionary policy, whereas adaptive expectations theory holds that no such changes in output could occur.
3. Mainstream economists have adopted some ideas from RET and some rational expectations assumptions are being incorporated into current macroeconomic models.
4. Monetarists and rational expectation theorists believe that cost-push inflation as impossible in the long run in the absence of excessive money supply growth.
1. F
2. F
3. T
4. T
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An increase in the price level is defined as
A) a recession. B) a growth boom. C) inflation. D) an expansion.
Under the Gold standard, a country is said to be in balance of payments equilibrium when the current account balance is
A) financed entirely by international lending without reserve movements. B) financed by international lending and with reserve movements. C) equal to zero. D) financed entirely by international lending and past gold reserves. E) financed entirely by gold reserves.
The level of investment necessary to keep the capital-labor ratio constant is called
A) capital investment. B) break-even investment. C) depreciated investment. D) diluted investment.
U.S. Gross National Product includes goods produced by:
A. foreign firms on U.S. soil. B. U.S. firms on foreign soil. C. foreign firms on foreign soil. D. None of these statements is true.