The rational expectations hypothesis implies that when macroeconomic policy changes
A) the economy will become highly unstable.
B) the way expectations are formed will change.
C) people will be slow to catch on to the change.
D) people will make systematic mistakes.
B
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Which of the following is TRUE of unemployment?
A) It is defined as the number of people actively looking for work who do not have jobs. B) The result is that the economy operates inside its production possibilities curve. C) There are psychological consequences associated with unemployment. D) All of the above.
Economists think of products as being in the same market if they
A. are traded in the same geographic location. B. cannot be substituted for other goods and services. C. are highly interchangeable. D. produced by companies that complete with each other.
Which of the following is correct?
A. Both purely competitive and monopolistic firms are "price takers." B. Both purely competitive and monopolistic firms are "price makers." C. A purely competitive firm is a "price taker," while a monopolist is a "price maker." D. A purely competitive firm is a "price maker," while a monopolist is a "price taker."
The false assumption that what is true for a part will also be true for the whole is called the:
A. paradox of thrift. B. fallacy of composition. C. post hoc fallacy. D. ceteris paribus assumption.