If you believe that expectations react quickly, you are likely:
a. a believer in rational expectations
b. a Keynesian
c. a theoretical economist
d. None of these.
a
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Comment on the following statement: "The shape of a firm's long-run average cost curve is determined by both external and internal economies (or diseconomies) of scale."
What will be an ideal response?
An individual's consumption and saving behavior during a given year, as a result of a planning process that considers his or her lifetime economic situations, is known as the
A. lifetime model. B. consumption model. C. life-cycle model. D. income model.
Monetarists believe:
a. the cause-and-effect relationship hypothesized by the Keynesians understates the impact of stimulative monetary policy. b. the cause-and-effect relationship hypothesized by the Keynesians is an accurate description of how monetary policy works. c. since the economy is operating at full employment, any stimulative monetary policy will cause the inflation rate to rise. d. the cause-and-effect relationship hypothesized by the Keynesians is backwards, and decreases in the money supply actually stimulate economic activity. e. the cause-and-effect relationship hypothesized by Keynesians will not work because investment does not respond to changes in interest rates.
Assuming transaction costs are small, the Coase theorem would predict that private parties could arrive at an efficient solution for which of the following problems?
a. One neighbor doesn't mow his lawn. b. One neighbor doesn't paint her house. c. One neighbor comes home on his noisy motorcycle late at night. d. All of the above are correct.