According to the rational expectation hypothesis, unpredictable shocks may cause
A. sustained levels of unemployment.
B. uncontrollable inflation.
C. long-lasting recession.
D. disequilibrium in the labor market.
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
Which of the following is a market-based solution to the problem of adverse selection?
A) Taxation B) Signaling C) Sniping D) Subsidization
Talking loudly in a library creates
a. a market for noise b. a positive externality c. a side payment d. a public good e. a negative externality
The principle that the opportunity cost increases as the production of one output expands is the:
a. law of demand. b. law of increasing opportunity costs. c. law of increasing returns to scale. d. law of supply.