Answer the following statement(s) true (T) or false (F)
1.The belief that workers and consumers incorporate the likely consequences of government policy changes into their expectations by quickly adjusting wages and prices is known as rational expectations theory.
2.Professor Robert Lucas, of the University of Chicago, developed the Phillips curve.
3.Rational expectations theorists believe that wages and prices are flexible.
4.Rational expectations theorists believe that government policies designed to alter aggregate demand are highly effective.
5.Real business cycle theorists believe that unexpected changes in the money supply cause fluctuations in real GDP.
1.true
2.false
3.true
4.false
5.false
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A firm chooses its profit-maximizing quantity of capital by
A) examining the total cost of capital equipment. B) comparing the price of capital with the price of labor. C) comparing the marginal revenue product of capital with the rental price of capital. D) determining the rate at which the firm can borrow funds to purchase plant and equipment.
A contract
a. is an example of a side payment b. eliminates the possibility of simultaneous exchange c. is worthless unless it refers to a perfectly competitive market d. often requires one party to do something first, and the other party to do something later e. can be enforced through the application of criminal law
Because of time lags, automatic stablizers are
A. have no effect on real GDP at all. B. more effective than discretionary fiscal policy in stablizing real GDP. C. equally effective as discretionary fiscal policy in stablizing real GDP. D. less effective than discretionary fiscal policy in stablizing real GDP.
Refer to the information provided in Figure 3.14 below to answer the question(s) that follow.
Figure 3.14Refer to Figure 3.14. At a price of $60, there is an excess
A. supply of zero sunglasses. B. demand of 300 sunglasses. C. demand of 150 sunglasses. D. supply of 300 sunglasses.