The rational expectations hypothesis implies that discretionary macropolicy may be
a. relatively effective in both the short run and long run.
b. relatively effective in the short run but ineffective in the long run.
c. relatively ineffective both in the short run and long run.
d. effective in the long run since decision makers will continually make predictable, systematic errors.
C
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Use the figure below to answer the following question.
If a price ceiling in this market is set at P1, producer surplus is represented as which area on the graph?
A. b. B. c. C. c + b + d. D. b + c.
Using the above figure, suppose there is a decrease in the number of suppliers. Then
A) the equilibrium price will decrease below $25 per dozen roses. B) we cannot predict what will happen to equilibrium quantity. C) the equilibrium quantity will decrease below 10 dozen roses. D) both the equilibrium price and quantity will increase.
If the propensity to hold money is 6 and the money supply is 12, then the classical aggregate demand curve is
a. P = 2Y b. P/Y = 48 c. P = 1/(2Y) d. P = 2/Y
Suppose Ford, GM, and Dodge make the majority of pick-up trucks sold in the United States If they all sell for approximately the same price, and Ford offers a $2,000 rebate on new truck sales, what can Ford expect to see?
a. an unprecedented increase in truck sales b. an immediate response by GM and Dodge c. a visit from the antitrust authorities of the government d. a revolution from Ford stockholders e. announcements by GM and Dodge that plans are underway to produce a much cheaper pick-up truck in six years