Suppose the central bank announces that it will permanently increase the inflation rate and there is central bank credibility
With adaptive expectations, expectations of inflation will adjust ________, and with rational expectations, expectations of inflation adjust ________. A) slowly; slowly
B) slowly; immediately
C) immediately; immediately
D) immediately; slowly
B
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Which of the following is an example of an external cost?
A) a grove of trees planted in a park in Seattle B) a library built in Philadelphia C) a new, faster computer chip D) an oil spill off the coast of South America E) a student graduating from college
The short run is that period during which there are no fixed commitments.
Answer the following statement true (T) or false (F)
If the intended aim of the price floor set in the graph shown was a net increase in the well-being of producers, then positive analysis would have us consider:
A. the policy to be effective if area C is larger than area E.
B. the policy to be effective if area E + B is larger than C +D + F.
C. the policy to be ineffective if area B is larger than area E.
D. the policy to be ineffective if area E + B is larger than A+C+D+ F.
What are some of the demerits of decentralization?
What will be an ideal response?