According to the theory of rational expectations, a fully anticipated expansionary monetary policy will
(a) increase potential output
(b) increase unemployment
(c) have no impact on real output
(d) promote the production of consumer goods over capital goods
(e) result in deflation
Ans: (c) have no impact on real output
You might also like to view...
A key assumption of new growth theory is that
A) all technological change is the result of luck. B) higher incomes lead to a higher birth rate. C) a successful innovator has the opportunity to earn a temporary, above-average profit. D) the population growth rate is lower than the real interest rate.
Requiring a firm with international operations to follow the standards of its home country instead of those of the foreign country has all of the following advantages EXCEPT
A) it takes care of the fear of a race-to-the-bottom by making it impossible for a home-based company to exploit low standards. B) it shifts the costs of improved standards to firms and consumers in high-income countries. C) it removes the threat of domestic firms relocating abroad for low standards and ensures that any relocation that takes place is due to foreign comparative advantage. D) it avoids the problems of high-income countries dictating what standards are to be used. In this situation, firms that cross national boundaries must conform to whichever standards are higher. E) it is a comprehensive measure, since it addresses the problem of production in foreign firms as well as firms from high-standards countries that relocate abroad.
Admission to the Euro required in 1997 that a country's government deficit not exceed ________ percent of GDP
A) twenty B) fourteen C) seven D) three
If the price of a good is above its equilibrium level, then
a. quantity demanded exceeds the quantity supplied b. there will be an excess demand c. quantity supplied exceeds quantity demanded d. the price will have to increase to establish equilibrium e. demand will shift to the left