The argument in favor of rational expectations is that
A. people will continue to acquire information as long as the marginal benefit of that information is positive.
B. individuals have a very good idea of what to expect from the government in terms of monetary policy but not fiscal policy.
C. if expectations were not rational, there would be unexploited profit opportunities available.
D. it is costless for individuals and firms to form rational expectations.
Answer: C
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A fruit packing plant usually shuts down for three months each year. During that period, what happens to its costs?
a. Its fixed costs are greater than zero. b. Its variable costs are greater than zero. c. Its total costs are zero. d. Its fixed costs are zero.
The marginal rate of substitution is
A. the slope of the utility curve. B. the slope of the contract curve. C. the slope of the utility possibilities curve. D. none of these answer options are correct.
A direct relationship is expressed graphically as a:
A. positively sloped line or curve. B. negatively sloped line or curve. C. horizontal line. D. vertical line.
The marginal revenue product of labor is
A) the marginal physical product multiplied by marginal revenue. B) the marginal revenue of output multiplied by the price of the input. C) total sales divided by total labor employed. D) total labor employed divided by total sales.