Rational expectations involve:
a. forecasts that are technically correct
b. forecasts that, while not necessarily correct, are the best that can be made given the available data.
c. forecasts that accurately predict the short-term future for wages and prices.
d. forecasts made by economists based on sophisticated econometric models.
b
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Among the factors contributing to externally induced cycles are all of the following except
a. changes in international exchange rates b. clustering of innovations c. the interaction of the multiplier and accelerator d. changes in consumer confidence e. population booms
The Fed can ________ in the economy.
A. change the supply of money, but not the interest rates B. change interest rates, but not the supply of money C. change both interest rates and the supply of money D. change neither interest rates nor the supply of money
Three years ago Dr. and Mrs. Henderson moved from the house they had owned for 20 years, but did not sell it. They decided to travel and bought a mobile home to live in. They now sell the house. How much of their capital gain on the house will be taxable?
A) 15 percent, depending on their tax bracket B) 28 percent, depending on their tax bracket C) All of it, if it is over $500,000 D) None of it, if it is less than $500,000
From an economic standpoint, the amount of pollution should be
A) zero. B) the amount that allows firms to maximize profits. C) the amount where firms are earning a normal rate of return on investment. D) at the point at which the marginal benefit from further reduction equals the marginal cost of further reduction.