The theory of rational expectations suggests that
A. people make systematic forecast errors.
B. people never make forecast errors.
C. people are slow to incorporate new information into their forecasts.
D. people make intelligent use of available information.
Answer: D
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Suppose the U.S. dollar is defined by law as being equal to 0.1 ounce of gold. Further suppose the British pound is defined as being equal to 0.05 ounce of gold. The implied exchange rate between the pound and the dollar is
A. A fixed rate at which $1 = 2 pounds. B. A flexible rate at which $2 = 1 pound. C. A fixed rate at which $2 = 1 pound. D. A flexible rate at which $1 = 2 pounds.
Productivity growth rates in the United States have remained fairly constant from 1948 to 2000.
Answer the following statement true (T) or false (F)
Average fixed cost
A. decreases as output increases. B. increases if marginal cost is increasing. C. increases if marginal cost is greater than average fixed cost. D. increases as output increases.
An increase in the demand for a product means that the:
A. demand curve shifts to the left. B. demand curve shifts to the right. C. supply curve shifts to the right. D. supply curve shifts to the left.