Rational expectations theory suggests that ________
A) policy announcements can impact behavior
B) policy announcements have no impact on behavior
C) unannounced policies have no impact on behavior
D) the optimal forecast is identical to the announced policy
A
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Governments prefer to avoid excessive current account surpluses because
A) the returns to domestic savings are more difficult to tax than those on assets abroad. B) an addition to the home capital stock may increase domestic unemployment and therefore lead to higher national income. C) foreign investment in one firm may have beneficial technological spillover effects on other foreign producers that the investing firm does not capture. D) an addition to the home capital stock may reduce domestic unemployment and therefore lead to higher national income. E) domestic savings increase with more investment abroad.
If the GDP gap is -$3.5 trillion, then
A. workers are employed overtime. B. the economy is experiencing a boom. C. the economy is in a recession. D. cyclical unemployment is negative.
Refer to the above table. If the price of the good produced is $5, the marginal revenue product of the 7th worker is
A. $275. B. $5000. C. $125. D. $55.
Monetary stimulus may be ineffective if
A. People usually respond to lower interest rates by consuming more goods and services. B. The investment demand curve is inelastic. C. Expectations of a boom cause the investment demand curve to shift to the right, offsetting interest rate effects that would stimulate the economy. D. The investment demand curve is horizontal.