Assume individuals consider only the long run effects of changes in future macro variables when forming expectations of future output and future interest rates. Suppose individuals expect future government spending to increase. Given this information, individuals will expect
A) an increase in the expected future interest rate and no change in expected future output.
B) an increase in the expected future interest rate and an increase in expected future output.
C) an increase in the expected future interest rate and a reduction in expected future output.
D) an increase in the expected future interest rate and an ambiguous effect on expected future output.
C
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In the long run when a perfectly competitive firm experiences positive economic profits,
A) firms exit the industry, the market supply curve shifts rightward, and the market price falls. B) firms enter the industry, the market supply curve shifts rightward, and the market price falls. C) firms exit the industry, the market supply curve shifts leftward, and the market price rises. D) firms enter the industry, the market supply curve shifts rightward, and the market price rises.
Which of the following will increase economic freedom?
a. freedom to enter and compete in markets b. high tariff rates c. high taxes d. rapid and unpredictable inflation
Moving downward and to the right along a linear demand curve, we know that total revenue
a. first increases, then decreases. b. first decreases, then increases. c. always increases. d. always decreases.
List and discuss the importance of the major effects of the deregulation that occurred in the 1980s.
What will be an ideal response?