The proponents of adaptive expectations believe that
a. there will be a substantial time lag before people anticipate the effects of a shift to a more expansionary macro-policy.
b. macro-policies that stimulate demand and place upward pressure on the general level of prices will temporarily increase output and employment.
c. discretionary changes in macro-policy can be made in a manner that will reduce the economic ups and downs of a market economy.
d. all of the above are true.
D
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A graph shows the price of a pound of cucumbers on the vertical axis and the quantity of new cars sold by GM on the horizontal axis. The price of a pound of cucumbers remains constant as the quantity of new cars sold increases
The graph of these data is A) a horizontal line. B) a vertical line. C) a curve with a maximum. D) a positively-sloped line.
Suppose losses cause industry Z to contract, and as a result, the prices of inputs used intensively in the industry's production process fall. We know, as a result, that industry Z is: a. an increasing cost industry
b. a constant cost industry. c. a decreasing cost industry. d. experiencing diminishing returns.
At a discount rate of 6 percent, what is the net present value of an investment project expected to yield $1,000 per year (to be received at year end) for the next three years?
a. $3,000 b. $2,829 c. $2,673 d. There is insufficient information to determine whether the project should be undertaken.
According to the Taylor rule, if there is an expansionary gap of 2 percent of potential output and inflation is 3 percent, what real interest rate will the Fed set?
A. 2 percent B. 2.5 percent C. 1.5 percent D. 3.5 percent