If people behave according to rational expectations theory, people would expect the rate of inflation this year to be:
A. the same as last year.
B. zero, regardless of the rate last year.
C. the rate based on predictable monetary and fiscal policies.
D. always higher than last year.
Answer: C
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One implication of the shape of the demand curve facing a perfectly competitive firm is that:
A. if the firm increases its price above the market price, it will earn higher revenue. B. if the firm increases its price above the market price, it will earn zero revenue. C. the market would be unable to reach a new equilibrium if demand changed. D. if the firm decreases its price below the market price, it will earn higher revenue.
Refer to Figure 6-12. The diagram shows two supply curves, SA and SB. As price rises from P0 to P1, which supply curve is more elastic?
A) They are equally inelastic. B) SB C) They are equally elastic. D) SA
There is no market failure if
A. the marginal private cost curve is upward sloping. B. the demand curve (for a good or service) is downward sloping. C. the demand curve lies about the marginal private cost curve. D. marginal private costs are greater than the external costs associated with a negative externality. E. none of the above
When the growth rate of the money supply is increased, interest rates will fall immediately if the liquidity effect is ________ than the other money supply effects and there is ________ adjustment of expected inflation
A) larger; fast B) larger; slow C) smaller; slow D) smaller; fast