A theory that has won virtually universal acceptance is a:
A) model.
B) hypothesis.
C) law.
D) variable.
Ans: C) law.
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Under the adaptive expectations hypothesis, which of the following is the effect of a shift to a more expansionary monetary policy?
a. In the short run, the real rate of output will be unaffected, but in the long run, it will increase. b. In the short run, the unemployment rate will decrease, but in the long run, it will self correct to the natural rate of unemployment. c. There will be a permanent increase in the real rate of output, but the inflation rate will also be a little higher. d. In the short run, the impact on the real rate of output is uncertain, but in the long run, output will increase.
Profit-maximizing banks try to keep their excess reserves as high as possible.
a. true b. false
Analysis that addresses the question of whether a policy should be used is called ________ analysis.
A. fiscal B. normative C. positive D. monetary
A movement along the production possibilities curve would imply that A) the labor force has grown. B) productivity has increased. C) society has chosen a different set of outputs. D) productivity has declined because workers are demanding more leisure.