Activists and nonactivists both believe that
a. the self-corrective mechanism of a market economy works quite well.
b. macro-policy should seek to minimize economic fluctuations, keep the inflation rate low, and establish an environment consistent with strong economic growth.
c. discretionary monetary and fiscal policy can be used successfully to speed the adjustment process and reduce the swings of the business cycle.
d. policies that stimulate aggregate demand can reduce the long-term rate of unemployment.
B
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According to the rational expectations hypothesis, an individual's assessment of future economic performance
A) considers both past performance and current monetary and fiscal policy. B) only considers past performance. C) does not consider the impact of inflation. D) does not consider past performance.
Why is deflation such a problem?
A. It increases the value of debt, making it harder to pay it back. B. It decreases the value of debt, making it harder to pay it back. C. It increases the value of debt, making it easier to pay it back. D. It decreases the value of debt, making it easier to pay it back.
Which of the following is an implication of the law of comparative advantage?
a. Countries with small amounts of labor relative to capital should specialize in producing labor-intensive commodities.
b. Since workers in high-income countries utilize larger amounts of capital than workers in less developed nations, trade between capital-rich and capital-poor nations results in the exploitation of labor in the less developed countries.
c. Countries that are high cost producers of agricultural products should trade those products for goods they can produce only at a low opportunity cost.
d. Countries that are low opportunity cost producers of timber products should trade those products for goods they can produce only at a high opportunity cost.
Briefly explain how American railroads lost their transportation monopoly.
What will be an ideal response?