According to the theory of rational expectations, the government can influence output
a. with appropriate fiscal and monetary policy.
b. in the short run, but not in the long run.
c. without affecting the price level.
d. only by making unexpected changes in aggregate demand.
d
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By making exchange ________, money allows for specialization and higher ________
A) more difficult; costs B) more difficult; productivity C) easier; costs D) easier; productivity
Using purchasing power parity instead of exchange rates to calculate output will most likely:
A. lower the relative value of output in developing countries. B. show that prices in developing countries are higher than prices in developed countries. C. leave the relative value of output in developing countries unchanged. D. increase the relative value of output in developing countries.
Increased production, but not increased inflation, will result in higher:
A. nominal GDP. B. money GDP. C. real GDP. D. current dollar GDP.
If the government wanted to efficiently limit the emission of carbon monoxide by all firms to exactly 4 million tons it could
A) issue rights to pollute worth 4 million tons and let the firms trade those rights in a market. B) appeal to firms' environmental conscience to pollute less. C) subsidize production. D) rely on the Coase Theorem.