Suppose the rate of inflation over the last 5 years has been around 4-5%. Investors use an inflation expectation of that range when making investment decisions. The decision of the investors is based on the theory of _____
a. absolute advantage
b. rational expectations
c. adaptive expectations
d. sticky wages
c
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The circular flow shows that aggregate spending is larger than aggregate income because people save
Indicate whether the statement is true or false
Externalities are consequences visited upon those individuals residing outside decision processes
Indicate whether the statement is true or false
Which of the following is evidence of an inflationary gap?
a. very long lines at employment agencies b. very short waiting times for product delivery c. very low sales figures d. very long search times for people looking for jobs e. very low unemployment rates
If climate change starts creating earthquakes, storms, droughts and all manner of obstacles to production operations, the effects can be shown on effected production function graphs by
A. eliminating long run production functions because they are irrelevant. B. changing the curves of the isoquants to straight lines. C. lowering the short run production function and reducing the numbers on each isoquant. D. eliminating the increasing returns portion of the short run production function.