The hypothesis of rational expectations contends that individuals
A. combine the effects of past policy changes on important economic variables with their own judgment about the future effects of current and future policy changes.
B. only make rational errors.
C. adapt slowly to the rate of inflation.
D. do not make systematic errors.
Ans: A. combine the effects of past policy changes on important economic variables with their own judgment about the future effects of current and future policy changes.
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According to the Application, the market price of meteorites varies from a few dollars per gram to hundreds of dollars per gram. In a market system like the market for meteorites, prices vary due to
A) government intervention in the pricing of the products. B) outsourcing. C) the lack of accounting rules in this market. D) the relative scarcity, or rarity, of the product.
According to the Application
A) stable marriages account for no more happiness than marriages ending in divorce. B) reported levels of happiness in the United States have increased over the past 30 years. C) money does appear to buy happiness, ceteris paribus. D) retired people report higher levels of happiness than people below the age of 40.
If a firm finds that, at its current level of employment, VMP > W, it will
A) be maximizing profits. B) be minimizing profits. C) increase the amount of labor it hires. D) decrease the amount of labor it hires.
In the long-run, monopolistically competitive firms:
A. charge prices equal to marginal cost. B. have excess capacity. C. produce at the minimum of average total cost. D. both B and C are true.