In the rational expectation model, government control over aggregate demand:
a. gives it the power to alter real output and employment even when the effects of government policies are expected.
b. can affect real output in the short-run only if policies are unexpected
c. has potential to change long-run real output as long as the aggregate supply curve is vertical.
d. has highly unpredictable effects on real output in the long run.
b
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What will be an ideal response?
The Federal Open Market Committee oversees the money supply through the purchase and sale of government securities
a. True b. False Indicate whether the statement is true or false
The "exotic" mortgage instrument of recent years is exemplified by the
A. "traditional" mortgage. B. "magical-mystery" mortgage. C. "interest-only" mortgage. D. bank mortgage loan.
The significant difference between adverse selection problems and moral hazard problems is
a. that adverse selection refers to bad luck, moral hazard refers to bad behaviors. b. that adverse selection applies to markets for goods, moral hazard applies to markets for services. c. only identifiable after an action has been taken. d. that in adverse selection one group of people starts out at a higher risk, while in moral hazard problems, people incur additional risks.