The theory of rational expectations says that
A. workers make excellent choices of places to work.
B. workers make the best possible forecasts of inflation.
C. economists make rational expectations of inflation.
D. economists expect workers to be rational.
Answer: B
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If the price of carrots is below the equilibrium price, the
A) quantity supplied of carrots exceeds the quantity demanded, and a shortage exists. B) quantity demanded of carrots exceeds the quantity supplied, and a shortage exists. C) quantity demanded of carrots exceeds the quantity supplied, and a surplus exists. D) quantity supplied of carrots equals the quantity demanded. E) quantity supplied of carrots exceeds the quantity demanded, and a surplus exists.
In the Keynesian view, the main source of economic fluctuations is
A) interest rates. B) investment. C) consumption. D) inflation.
The formal definition of price elasticity of demand is
A) change in quantity demanded divided by change in price. B) quantity demanded divided by price. C) percentage change in quantity demanded divided by percentage change in price. D) quantity demanded multiplied by price and divided by 100.
In practice, placing a price control on a natural monopoly:
A. is easy and commonly practiced. B. is difficult because of lack of information. C. always creates the same outcome as public ownership of the industry. D. is never a good idea.