When using rational expectations, forecast errors will, on average, be ________ and ________ be predicted ahead of time
A) positive; can
B) positive; cannot
C) negative; can
D) zero; cannot
D
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For a consumer bound by the collateral constraint, a reduction in the price of the collateral leads to
A) nothing. B) an increase in current consumption and a decrease in future consumption. C) a decrease in current consumption and no change in future consumption. D) a decrease in current and future consumption.
Unions understand that they can end up being big winners from inflation if they sign multiyear fixed-wage contracts
Indicate whether the statement is true or false
If a market is allowed to move freely to its equilibrium price and quantity, then an increase in supply will
a. increase consumer surplus. b. reduce consumer surplus. c. not affect consumer surplus. d. Any of the above are possible.
How would a negative real shock be represented in the AS/AD model?
A. As a leftward shift of the long-run aggregate supply curve that reduces growth and increases inflation. B. As a rightward shift of the long-run aggregate supply curve that reduces growth and increases inflation. C. As a leftward shift of the long-run aggregate supply curve that increases growth and reduces inflation. D. As a rightward shift of the long-run aggregate supply curve that increases growth and reduces inflation.