The rational expectations hypothesis is a theory that states that
A) people make their economic plans by using all available past and present information and their understanding about how the economy operates.
B) individuals can predict the future perfectly, at least with respect to macroeconomic variables like the interest rate and inflation.
C) people make their economic plans in an irrational, intuitive manner.
D) people make their economic plans by relying on the policy statements made by the President and by leaders in Congress.
A
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Foreign direct investment declined worldwide during the recession of 2007-2009
The decline in foreign direct investment in developing countries can make it more difficult for these countries to break out of the vicious cycle of low economic growth and A) overpopulation. B) low saving and investment. C) low government spending. D) a low import/export ratio.
As cities prospered and per-capita incomes increased, the demand for bus travel diminished. This suggests that
a. cities could raise revenue by increasing bus fares b. the demand for bus travel is price elastic c. bus travel and automobile travel are complements d. bus travel is an inferior good e. bus travel is a luxury
If the economy is self-regulating and current Real GDP is greater than Natural Real GDP, the economy is operating __________ the natural unemployment rate and wages will soon __________
A) below; fall. B) above; fall C) below; rise D) above; rise E) none of the above
Use the following graph for a competitive market to answer the question below.
A price floor of $25 per unit will result in a
A. surplus of 250 units. B. shortage of 250 units. C. shortage of 200 units. D. surplus of 200 units.