According to the theory of rational expectations, errors in predicting inflation will
A. be biased upward more often than not.
B. be purely random.
C. tend to be biased downward when inflation is rising and tend to be biased upward when inflation is falling.
D. tend to be biased upward when inflation is rising and tend to be biased downward when inflation is falling.
Answer: B
You might also like to view...
The Phillips curve
Holding other factors constant, a higher relative price of a firm's output will:
A. increase national saving. B. decrease national saving. C. decrease investment. D. increase investment.
Use the following graph to answer the next question.
If the industry operates as a pure monopoly, the profit-maximizing quantity of output would be ________.
A. a level that is not labeled in the graph B. 195 C. 160 D. 90
A competitive market structure differs from the monopoly, oligopoly, and monopolistic competition structures in the
A) producers' ability to set price. B) profit maximization condition. C) amount of long run profit. D) entry conditions.