The rational expectations theory indicates that expansionary policy will
a. stimulate real output in the long run but not in the short run.
b. expand real output and employment if the public quickly anticipates the effects of the expansionary policy.
c. equalize real and nominal interest rates during lengthy periods of inflation.
d. fail to increase employment because individuals will anticipate it and take actions that will offset its impact.
D
You might also like to view...
The short-run version of aggregate supply assumes that product prices are ________.
A. both input and product prices are fixed B. fixed while resource prices are flexible C. flexible while resource prices are fixed D. both input and product prices are flexible
Price discrimination occurs when:
a. firms maximize their profit by setting price equal to marginal cost. b. a seller charges different prices to different consumers of the same product or service. c. a seller charges the same price to consumers of a different product or service. d. a seller charges different prices to consumers, discriminating by race or gender of the consumer.
One consequence of unemployment is that:
A. some productive potential of the economy is being wasted. B. the time and skills of the unemployed are not being put to use. C. it can create uncertainty about the future. D. All of these are consequences of unemployment.
Which of the following is a valid concern about the national debt for a country whose debt is held entirely by its citizens?
a. The welfare of future generations will be directly related to the per-capita size of the national debt that they inherit. b. Growth of the national debt will eventually lead to the bankruptcy of the government. c. When the debt comes due, future generations may be unable to pay it off. d. If the increases in the national debt reduce private expenditures on capital formation, future generations may have lower incomes because they will inherit a smaller stock of capital.