According to the theory based on rational expectations and flexible wages and prices,
A. neither fiscal nor monetary policy influence real Gross Domestic Product (GDP) in the long run.
B. only the combination of discretionary fiscal policy and conservative monetary policy can affect real Gross Domestic Product (GDP) in the long run.
C. monetary policy has less effect on real Gross Domestic Product (GDP) than fiscal policy in the long run.
D. fiscal policy has less effect on real Gross Domestic Product (GDP) than monetary policy in the long run.
Answer: A
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In the long run, existing firms exit a perfectly competitive market
A) only if economic profits are zero. B) if they make a positive economic profit. C) if normal profits are greater than zero. D) only if they incur an economic loss. E) if they either make a normal profit or if they incur an economic loss.
Which of the following would not be considered a market distortion:
a. minimum wage b. union-negotiated wage c. monopsony wage d. efficiency wage e. all of the above are market distortions
Movement along an indifference curve causes the loss in marginal utility (MU) of one good to ____ the marginal utility (MU) gained from another good
a. exceed b. reduce c. equal d. maximize
What is the interest rate on a 12-month U.K. certificate of deposit if the dollar return on the certificate is 4 percent and the dollar has appreciated 9 percent against the British pound?
a. 15 percent b. 13 percent c. 9 percent d. 5 percent e. 4 percent