Which of the following scenarios illustrates the theory of rational expectations?
a. Kyle decides to buy a plot of land near the new industrial hub of his city
b. Sheila decides to take up a job in a shoe store rather than studying further.
c. Dean decides to look for new jobs when the economy is in recession.
d. Kevin determines that the average miles per gallon on his last three car trips is 37.
a
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Ignoring the government and foreign sectors, if planned investment spending is $500 billion, planned saving is $800 billion, and real Gross Domestic Product (GDP) is $13 trillion, then unplanned inventories will
A) decrease $300 billion. B) increase $300 billion. C) increase $800 billion. D) not change.
The productivity of land is the most important factor that determines the standard of living of a country
a. True b. False Indicate whether the statement is true or false
The impact of saving on the economy is
a. always beneficial b. always harmful c. beneficial in the short run, but not in the long run d. beneficial in the long run, but not necessarily in the short run e. neutral in both the short run and the long run
The short run sequence of events following an unanticipated shift to restrictive monetary policy would be higher interest rates followed by dollar
a. depreciation, higher exports, and lower imports. b. depreciation, lower exports, and higher imports. c. appreciation, lower exports, and higher imports. d. appreciation, higher exports, and lower imports.