According to rational expectations theory, forecast errors of expectations
A) are more likely to be negative than positive.
B) are more likely to be positive than negative.
C) tend to be persistently high or low.
D) are unpredictable.
D
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A person who generally drives without a seat belt on does not reveal this to his automobile insurance company before he purchases insurance. This is an example of
A) adverse selection. B) moral hazard. C) signaling. D) screening.
Which of the following is the latest short run operating target specified to the New York Fed by the FOMC directives?
a. The federal funds rate b. The primary lending rate c. Quantitative easing d. Legal reserves e. The bank rate
Critics of the Federal Reserve maintain that, to correct the credibility problem of monetary policy, the Fed should:
a. tighten monetary policy. b. be required to maintain a growth rate of the money supply that is fixed by law. c. give more power to the Federal Open Market Committee. d. ignore public opinion and establish more discretionary power over monetary policy. e. merge with the U.S. Treasury and be dissolved as an independent agency.
If in the short run total product is decreasing as more workers are hired, then the marginal physical product is
A. positive. B. increasing. C. negative. D. zero.