According to the rational expectations school, _____
a. on average people have very little idea of what to expect from government policy makers
b. people form expectations by focusing only on the private sector
c. changes in the expected price level shift the aggregate demand curve
d. people do not consider likely government policies when forming expectations, choosing to remain rationally ignorant
e. people form expectations, in part, by considering the probable future actions of government policy makers
e
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In the market for insurance,
A) buyers often have more information than sellers. B) sellers are protected from lawsuits brought by buyers. C) demand is perfectly inelastic because, by law, home owners and automobile drivers must have insurance. D) sellers often have better information than buyers.
Local property taxes are a
A. Progressive tax because the total tax on housing increases as the price of the house increases. B. Progressive tax because as income increases people tend to buy more expensive houses. C. Regressive tax because poorer people spend a larger portion of their income on property taxes. D. Proportional tax because properties are taxed at the same rate regardless of the value of the home.
A person who chooses not to be in the labor force reveals that
A. either leisure or the value of nonpaid labor is worth zero to him. B. his potential product in the market is zero. C. either leisure or the value of nonpaid labor is worth more to him than the value that society places on his potential product in the market. D. either leisure or the value of nonpaid labor is worth less to him than the value that society places on his potential product in the market.
The figure above shows Clara's demand for CDs. At a price of $20 for a CD, the value of Clara's total consumer surplus for all the CDs she buys is
A) $40. B) $30. C) $20. D) $4.