If a nation experiences weather disasters, such as tsunamis and droughts, then its:
a. Average price level and real GDP should remain constant until there is a change in Aggregate Demand.
b. Average price level and real GDP should fall.
c. Average price level and real GDP should rise.
d. Average price level should fall, and real GDP should rise.
e. Average price level should rise, and real GDP should fall.
.E
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If inflation is fully anticipated and if there are no restrictions on contracts, then inflation will not redistribute purchasing power
a. True b. False
Which of the following factors explains why managers of government agencies have little incentive to achieve operational efficiency?
a. Public-sector managers have no fear of bankruptcy when operational efficiency is not achieved. b. Public-sector managers face fierce competition. c. It is relatively easy for voters to detect operational inefficiency in the public sector and do something to correct it. d. All of the above explain why government agencies have little incentive to be efficient.
The portion of the public debt held outside federal agencies and the Federal Reserve is:
A. equally split between U.S. and foreign lenders. B. smaller than the portion held by federal agencies and the Federal Reserve. C. all held by foreign lenders. D. larger than the portion held by federal agencies and the Federal Reserve.
The argument in favor of rational expectations is that
A. people will continue to acquire information as long as the marginal benefit of that information is positive. B. individuals have a very good idea of what to expect from the government in terms of monetary policy but not fiscal policy. C. if expectations were not rational, there would be unexploited profit opportunities available. D. it is costless for individuals and firms to form rational expectations.