Under the assumption of rational expectations, real GDP is determined by
A) the economy's aggregate demand curve.
B) the Fed.
C) a combination of monetary and fiscal policy.
D) the nation's long-run aggregate supply curve.
D. the nation's long-run aggregate supply curve.
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Monetarism is a school of thought put forth by ________, who argued that the economy would most likely be at potential GDP
A) Finn Kydland and Edward Prescott B) Milton Friedman C) Robert Lucas and Thomas Sargent D) Karl Marx
If Figure 4-8 above is to show the result of a "fully accommodating" monetary policy following a shift of the IS curve from IS0 to IS1, what is the initial level of real income and interest rate before these changes?
A) 3500; 7.5%. B) 4500; 12.5%. C) 5500; 7.5%. D) 4500; 2.5%.
An incumbent's threat to use limit pricing if a firm enters the market
A) is credible if the firms have identical costs and market demand supports both firms. B) is credible if the firms have different costs and market demand won't support both firms. C) is not credible if the firms have different costs and market demand won't support both firms. D) is cheap talk, because the other firm will enter and the incumbent will still be able to charge monopoly pricing.
What is shown by the budget line in a two-product (A and B) case? Describe what happens when there is a change in income or the price of a product
Please provide the best answer for the statement.