The hypothesis stating that people combine the effects of past policy changes on important economic variables with their own judgment about the future effects of future and current policy changes is known as
A) policy irrelevance hypothesis.
B) rational expectations hypothesis.
C) life cycle hypothesis.
D) real business cycle hypothesis.
B
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In any game, all that is necessary to rule out an outcome is that
a. both players would want to change. b. one player would want to change. c. one player is worse off than with some other strategy. d. both players are worse off than with some other strategy.
In a closed economy, equilibrium real Gross Domestic Product (GDP) occurs where
A) the C + I + G line crosses the 45-degree line. B) saving exceeds planned investment. C) planned expenditures exceed national income. D) all of these.
Which of the following is not a problem with poorly defined property rights?
a. Insufficient incentive exists to produce resources that cannot be protected. b. Resources will tend to be underutilized. c. Individuals may be able to use resources without paying for them. d. Little incentive to conserve on the use of poorly defined resources.
A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock. B. long-run supply shock. C. short-run demand shock. D. long-run demand shock.