The view that individuals weigh all available evidence when they formulate their expectations about economic events (including information concerning the probable effects of current and future economic policy) is called:
A. the adaptive expectations hypothesis.
B. the permanent income hypothesis.
C. the rational expectations hypothesis.
D. the Phillips curve.
Answer: C
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Refer to Figure 18-1. Europe experiences an economic boom. Assuming all else remains constant, this would be represented as a movement from
A) C to B. B) D to A. C) D to C. D) B to A.
If the price of orange juice rises 10%, and as a result the quantity demanded falls by 10%, then one can conclude that the demand for orange juice
A) is perfectly elastic. B) is inelastic. C) has a unitary elasticity. D) has a constant elasticity.
A monopolist maximizes profits by finding
A) the rate of output where marginal revenue equals marginal cost. B) the rate of output where price equals marginal cost. C) the price where price exceeds marginal revenue by that largest amount. D) the price where average revenue and marginal cost are equal.
The difference between a firms' profit-maximizing quantity and the quantity that minimizes average cost is called excess capacity
Indicate whether the statement is true or false