According to some New Keynesian theories, one possible rationale for active policy making is
A) growing competition in U.S. product markets.
B) flexible prices.
C) sluggish adjustment of the price level in response to changes in aggregate demand
D) people are not rational and so do not react to incentives.
C
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An increase in the unemployment rate would be shown on a production possibilities curve by
A. shifting the entire curve outward. B. shifting the entire curve inward. C. moving from a point on or near the curve to a point closer to the origin, rather than shifting the entire curve. D. moving from a point inside the curve to a point on the curve, rather than shifting the entire curve.
Changes in reserve requirements are made within legal limits by
a. the Federal Open Market Committee. b. Federal Reserve Banks. c. member banks of the Fed. d. the Board of Governors.
Which two countries ran substantial trade surpluses for most of the last three decades?
a. Germany and Russia b. Russia and Japan c. Germany and Japan d. Germany and Mexico
The advantages of maintaining monopolies:
A. always outweighs the total welfare costs due to lost surplus. B. never outweighs the total welfare costs due to lost surplus. C. sometimes outweighs the total welfare costs due to lost surplus. D. is a normative argument that has no right answer.