The Lucas supply function, in combination with the assumption that expectations are rational, implies that an announced monetary policy change will lead to
A. a negative price surprise.
B. a positive price surprise.
C. a positive price surprise for expansionary monetary policy and a negative price surprise for contractionary monetary policy.
D. no price surprise.
Answer: D
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Answer the following statement(s) true (T) or false (F)
1. According to the cost-effectiveness criterion, all polluting sources would abate pollution up to the point where their individual abatement levels were equal. 2. According to the cost-effective abatement criterion, all polluting sources would abate pollution up to the point where their individual total abatement cost (TAC) levels were equal. 3. If the MACs for firm 1 and 2 are: MAC1 = 0.4A1 and MAC2 = 0.8A2, respectively, and the combined abatement standard is 15 units, then the cost-effective abatement levels are 10 units for firm 1 and 5 units for firm 2. 4. Suppose the combined abatement standard is set at 22 units and firm J and firm K have MAC functions of MACJ = 0.5A, and MACK = 0.75A, respectively. If firm J is abating 10 units and firm K is abating 12 units, firm K should abate more units and firm J should abate less.
The difference between interest income or receipts earned on investments in the rest of the world by the residents of a given country and the payments to foreigners on investments they have made in a given country is called:
A) unilateral transfers. B) net investment income. C) capital expenditures. D) none of the above.
Complementary goods are goods
a. that are consumed jointly b. that are consumed one in place of the other c. for which demand increases when the price of its complementary goods increases d. for which demand decreases when the price of its complementary goods decreases e. that are inversely related
The main problem posed by trade blocs for nonmember nations is that:
A. member nations may achieve growth rates that exceed those of nonmember nations. B. nonmembers must exchange their currencies for foreign monies before they can engage in export or import transactions. C. nonmembers face tariffs that member nations do not. D. member nations refuse to participate in tariff negotiations sponsored by GATT.