A rational-expectations theorist argues for increased government involvement in the economy to ensure stable price and employment growth.
Answer the following statement true (T) or false (F)
False
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In the long run,
a. the natural rate of unemployment depends primarily on the level of aggregate demand. b. inflation depends primarily upon the money supply growth rate. c. there is a tradeoff between the inflation rate and the natural rate of unemployment. d. All of the above are correct.
The primary benefit that results when a nation employs its resources in accordance with the principle of comparative advantage is
What will be an ideal response?
Which of the following statements is true of a country that has a gold standard exchange rate system?
A. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase the price of gold. B. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to decrease the price of gold. C. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to reduce its money supply. D. A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase its money supply.
Consider a Cournot duopoly with the following inverse demand function: P = 10 ? 0.5Q1 ? 0.5Q2. The firms' marginal costs are identical and are given by MCi(Qi) = 3. Based on this information, firm 1 and 2's reaction functions are:
A. r1(Q2) = 14 ? 0.25Q2 and r1(Q2) = 14 ? 0.25Q1. B. Q1 = 14 ? 0.25Q2 and Q2 = 14 ? 0.25Q1. C. r1(Q2) = 7 ? 0.5Q1 and r2(Q1) = 7 ? 0.5Q2. D. Q1 = 7 ? 0.5Q2 and Q2 = 7 ? 0.5Q1.