The hypothesis that people's spending decisions are based on all available information, including the anticipated effects of government intervention, is known as
A. Rational responses.
B. The velocity of money.
C. Rational expectations.
D. Fiscal expectations.
Answer: C
You might also like to view...
Suppose a drought increased the price of corn by 25 percent while it decreased the quantity by 50 percent. The price elasticity of demand equals
A) 2.00. B) 0.50. C) 20.0. D) zero.
Around what percentage of state government spending is finance by intergovernmental transfers? Give three justifications for intergovernmental transfers
What will be an ideal response?
In experimental tests of the ultimatum game:
a. the proposer often offers an even split of the "pie", and responders often reject smaller offers, consistent with the predictions of game theory. b. the proposer often offers an even split of the "pie", and responders often reject smaller offers, in contrast to the predictions of game theory. c. the proposer often offers an unfair split, taking the lion's share of the "pie" for him or herself, and responders often accept such offers, consistent with the predictions of game theory. d. the proposer often offers an unfair split, taking the lion's share of the "pie" for him or herself, and responders often accept such offers, in contrast to the predictions of game theory.
Assume that Anna buys peanut butter and bread. If the price of peanut butter falls, then
A. One end of her budget constraint will move away from the origin. B. Her entire budget constraint will shift away from the origin. C. Her entire budget constraint will shift toward the origin. D. Her indifference curves will shift away from the origin.