What is the difference between the Keynesian and rational expectations theories concerning the success of stabilization policy?
What will be an ideal response?
The Keynesians believe that government can affect real GDP and employment. The rational expectationists believe that government stabilization policies have no effect on real GDP or employment. The only effect is on the price level.
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In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?
A) Increase the available amount of resources. B) Increase the level of technology. C) Redistribute the existing resources to produce more apples and fewer oranges. D) First move to point B and then move to point F.
The most important single factor in determining the exchange rate in the short run is
a. inflation differentials. b. interest rate differentials. c. monetary growth differentials. d. price differentials.
Which of the following would be counted in 2016's GDP?
A. the bonus check a stockbroker gets from his/her company in 2016 B. the value of a TV that was produced in 2015 but not sold until 2016 C. the value of a bond sold by the federal government D. the value of a loan you take in 2016
Refer to the information provided in Figure 4.6 below to answer the question(s) that follow.Equilibrium in this market occurs at the intersection of curves S and D.
Figure 4.6Refer to Figure 4.6. The deadweight loss due to underproduction is area [C + F] if price is
A. P1. B. P2. C. P3. D. > P3.