According to the rational expectations school, when monetary policy makers do exactly what is expected of them, their efforts to stimulate the economy will have no effect on employment
a. True
b. False
Indicate whether the statement is true or false
True
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As a general rule, if pollution costs are external, firms will produce:
a. too little of a polluting good. b. too much of a polluting good. c. an optimal amount of a polluting good. d. cannot be determined without additional information.
A model is defined as a:
a. description of all variables affecting a situation. b. positive analysis of all variables affecting an event. c. simplified description of reality to understand and predict an economic event. d. prediction based on historical evidence.
In deciding how many guitars to buy for his shop before the Christmas season, Mark is making a(n) ________ decision.
A. macroeconomic B. microeconomic C. normative D. irrational
The real-income effect is typically small because
A) the change in price of one particular item has little effect on total purchasing power. B) income has no relation to consumption. C) price changes tend to balance out over time. D) real-incomes are always rising.