Adaptive expectations assumes that individuals
A) can accurately predict the future.
B) base predictions on random events (i.e., animal spirits).
C) form their predictions of macroeconomic variables randomly.
D) use all available information in predicting the future.
E) none of the above
E
You might also like to view...
If the MPS is 0.1 and the income tax rate is 0.33 the marginal leakage rate for a closed economy is
A) 0.033. B) 0.23. C) 0.43. D) 0.397.
The four phases of a business cycle, in order, are trough, depression, peak, and expansion
a. True b. False Indicate whether the statement is true or false
In the simple circular-flow diagram, who buys the factors of production?
a. households only b. firms only c. both households and firms d. neither households nor firms
Discuss the major differences between classical and Keynesian economists. Be sure to explain how they differ with regard to how quickly equilibrium is restored in the economy as well as what role they see for government action in restoring equilibrium.
What will be an ideal response?