The rational expectations hypothesis is a theory that states that
A. people make their economic plans by relying on the policy statements made by the President and by leaders in Congress.
B. individuals can predict the future perfectly, at least with respect to macroeconomic variables like the interest rate and inflation.
C. people make their economic plans by using all available past and present information and their understanding about how the economy operates.
D. people make their economic plans in an irrational, intuitive manner.
Answer: C
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The essential feature that differentiates imperfectly competitive firms from perfectly competitive firms is that an imperfectly competitive firm:
A. coordinates their output decisions with other firms. B. produces a good with no close substitutes. C. faces a downward-sloping demand curve. D. faces high barriers to entry.
If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until
A) all consumers will be able to afford the product. B) the quantity demanded exceeds the quantity supplied. The market will then be in equilibrium. C) quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price. D) quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.
What is inflation targeting?
A. Making sure inflation is reduced to zero. B. Increasing the required reserve ratio when there is inflation. C. Increasing the supply of money in the economy. D. Aiming for a particular inflation level.
Over the last 30 years in the United States, the black-white earnings ratio for women has ________ and for men has ________.
A. steadily increased; been relatively flat B. steadily increased; steadily increased C. been relatively flat; steadily increased D. been relatively flat; steadily decreased E. steadily increased; steadily decreased