According to the theory of rational expectations, expansionary fiscal policy that is anticipated will:
a. cause wage expectations to adjust downward immediately following the lower price level.
b. increase the real wage rate in the long run.
c. cause a permanent decline in the natural rate of unemployment.
d. decrease the real wage rate in the long run.
e. cause wage expectations to adjust upward immediately following the higher price level.
e
You might also like to view...
The substantial increase in clear property rights has severely impeded growth in many developing countries
Indicate whether the statement is true or false
To maximize profit, a firm will produce the level of output where MR = MC. If a firm actually makes a profit depends on the relationship of price to average total cost
What are the three possible relationships between price and average total cost that determine if a firm will make a profit, experience a loss, or break even?
Who gets scarce resources in a market economy?
a. the government b. whoever the government decides gets them c. whoever wants them d. whoever is willing and able to pay the price
If there is a surplus in the market for loanable funds, the resulting change in the real interest rate
a. reduces both the quantity of loanable funds supplied and the quantity of loanable funds demanded. b. reduces the quantity of loanable funds supplied and raises the quantity of loanable funds demanded c. raises both the quantity of loanable funds supplied and the quantity of loanable funds demanded. d. raises the quantity of loanable funds supplied and reduces the quantity of loanable funds demanded.