Rational expectations theory assumes that:
A. people behave rationally and that all product and resource prices are flexible both upward
and downward.
B. firms pay above-market wages to elicit work effort.
C. markets fail to coordinate the actions of households and businesses.
D. markets are dominated by monopolistic firms.
A. people behave rationally and that all product and resource prices are flexible both upward
and downward.
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When a society is more equal:
A. the more the economy grows, so the best economy is the most equal. B. economic growth will provide the most resources for its disadvantaged members. C. the more everyone gains when the economy improves, but that doesn't mean the most equal society is the best society. D. economic growth will create imbalance, and the government will need to work to equalize incomes.
Economic policy in the real world reflects:
A. special interest desires only. B. a balancing of cost/benefit analysis and special interest desires. C. cost/benefit analysis only. D. a complete lack of understanding of the principles of economics.
If a good that generates negative externalities were priced to take these negative externalities into account, its
A. price would remain constant and output would increase. B. price would increase but its output would remain constant. C. price would increase, and its output would decrease. D. price would decrease, and its output would increase.
Because a public good creates benefits everyone shares, individuals are generally very willing to bear the cost of providing the good
Indicate whether the statement is true or false