The Lucas critique is an objection to the assumption that
A. inflation is always and everywhere a monetary phenomenon.
B. historical relationships between macroeconomic variables will continue to hold after new policies are in place.
C. people form expectations rationally.
D. there is a negative relationship between inflation and unemployment.
Answer: B
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Refer to the above figure. The rightward shift of the curve could have been caused by
A) a technological improvement. B) a technological setback. C) an increase in income. D) a decrease in income.
A normal rate of return on investment is equal to
A) accounting profit minus economic profit. B) the opportunity cost of capital plus any other implicit costs. C) accounting profit plus economic profit. D) total revenue plus total accounting profit
Figure 3.2 shows the total cost and total benefit curves for a professional guitarist. If the guitarist is currently practicing 7 hours per day, then:
A. he should practice more because net benefits would increase.
B. he should practice less because net benefits would decrease.
C. he should practice less because net benefits would increase.
D. he should practice more because net benefits would decrease.
A unit tax of $1 will always
A. leave the supply curve unchanged. B. shift the supply curve upward by less than $1. C. shift the supply curve upward by more than $1. D. shift the supply curve up by exactly $1.