Which of the following is false?
a. If people can anticipate the plans of policy makers and alter their behavior quickly, their behavior could neutralize the intended impact of government action on real GDP.
b. The theory of rational expectations leads to optimistic conclusions regarding macroeconomic policy's ability to achieve its intended economic goals.
c. Rational expectation economists believe that wages and prices are flexible, and that workers and consumers incorporate the likely consequences of government policy changes quickly into their expectations.
d. Catching consumers and businessmen off-guard with macroeconomic policy changes gets harder the more you try to do it.
b
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Public goods represent ________ because by their very nature they are nonexcludable and nonrival which makes it difficult for the private sector to supply them profitably.
A. a negative externality B. a positive externality C. efficient production D. a market failure
When a bank suspects that a $1 million loan might prove to be bad debt that will have to be written off in the future the bank
A) can set aside $1 million of its earnings in its loan loss reserves account. B) reduces its reported earnings by $1, even though it has not yet actually lost the $1 million. C) reduces its assets immediately by $1 million, even though it has not yet lost the $1 million. D) reduces its reserves by $1 million, so that they can use those funds later.
Which of the following statements can correctly be made about social regulation? I. Extensive social regulation may have an anticompetitive effect. II. The benefits of social regulation are easier to measure than are the costs of social regulation
A) I only B) II only C) both I and II D) neither I nor II
James offers you $1,000 today or $X in 7 years. If the interest rate is 4.5 percent, then you would prefer to take the $1,000 today if and only if
a. X < 1,045.00. b. X < 1,188.89. c. X < 1,266.67. d. X < 1,360.86.