The theory of rational expectations concludes that
A. discretionary policies are more effective than rules in stabilizing the economy.
B. discretionary fiscal policy is a more powerful stabilization device than is discretionary monetary policy.
C. discretionary monetary policy is a more powerful stabilization device than is discretionary fiscal policy.
D. since expectations can leave discretionary stabilization policies ineffective, it is better to rely upon policy rules.
D. since expectations can leave discretionary stabilization policies ineffective, it is better to rely upon policy rules.
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According to Keynes, planned consumption
A) decreases as disposable income increases. B) is positively related to real disposable income. C) is unstable and fluctuates widely with changes in disposable income. D) is indirectly related to the interest rate.
In which situation would a monopolist be maximizing profit when it produces at an output where MC < MR?
a. none because when MC < MR, profit is not maximized b. when the barriers of entry are overcome so that other firms enter c. when costs keep falling as output increases d. when price increases as output increases e. when economic profit is greater than normal profit
If a country imposes a tariff on some good, then which of the following curves shifts right?
a. both the demand for loanable funds and demand in the market for foreign-currency exchange. b. the demand for loanable funds and demand in the market for foreign-currency exchange. c. demand in the market for foreign-currency exchange but not the demand for loanable funds. d. neither the demand for loanable funds nor demand in the market for foreign-currency exchange.
Which of the following factors most likely would explain why a U.S. company would choose to operate in the United States despite much lower wages in Mexico?
A. The absence of significant trade barriers B. The low cost of transportation between the two countries C. The lower productivity of Mexican workers D. The presence of many Japanese companies in Mexico