The main policy conclusion of the rational expectations theory is
a. fiscal policy lags are so long and variable that such policy is worthless, but monetary policy can stimulate output.
b. monetary policy lags are so long and variable that such policy is worthless, but fiscal policy can stimulate output.
c. both monetary and fiscal policy will affect real output if firms and households correctly anticipate the effects of changes in government policy.
d. neither monetary nor fiscal policy will affect real output if firms and households correctly anticipate the effects of changes in government policy.
D
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Which of the following statements is true about data?
A) Empiricism does not necessarily involve data. B) Consistency of models can be checked using data. C) Convincing data analysis in economics relies on using a small sample. D) Facts that describe the world are not considered data.
The greater the degree of substitutability between capital and labor, the greater will be the downward shift in the cost curve when wage falls.
Answer the following statement true (T) or false (F)
The tyranny of collateral ________
A) suggests that government tax rates are too high in the United States B) gives rise to the twin problems of moral hazard and adverse selection C) implies that when a poor person has a good idea they find it difficult to acquire financing D) attributes moral hazard to excessive government regulation
If the federal government has a budget surplus, then the national debt is:
a. reduced. b. fully repaid. c. negative. d. interest-free.