Suppose that a labor union negotiates an increase in wages of 4 percent for the coming year because annual inflation for the past five years has been 4 percent. The expectations formed by the union are:
a. pessimistic expectations.
b. deductive expectations.
c. rational expectations.
d. adaptive expectations.
e. optimistic expectations.
d
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The free-rider problem is the reason way private markets are unlikely to achieve the efficient level of production of
A) normal goods. B) excludable goods. C) public goods. D) private goods.
Refer to the information above. What is the highest value of gross investment over these periods?
A) 140. B) 106.75. C) 89.25. D) 192.5
Which of the following correctly describes factors that contributed to the change in the federal budget deficit between 1990 and 1998?
a. Federal taxes were cut by President George H.W. Bush and Congress in 1990, which helped in his reelection campaign in 1992 and contributed to a continually rising budget deficit during the 1990s. b. Federal taxes were cut again by President Bill Clinton in 1993, which further contributed to a continually rising budget deficit during the 1990s. c. Accelerated growth in federal outlays triggered the rapid expansion of the federal workforce between 1990 and 1998, which further contributed to a continually rising budget deficit during the 1990s. d. Taxes were raised, spending was cut, productivity rose, consumer spending increased, the stock market was the strongest in history, and the country experienced a short-lived budget surplus. e. Defense and international programs were identified as the only two areas of potential spending cuts.
Refer to the graph. An increase in the Security Market Line from SML 1 to SML 2 and an increase in the average expected rate of return of asset A from Y 1 to Y 2 would be explained by:
A. arbitrage only.
B. a restrictive monetary policy only.
C. both arbitrage and a restrictive monetary policy.
D. neither arbitrage nor a restrictive monetary policy.