According to rational expectations theory, which of the following is the best approach to lower the inflation rate?
A. preannounced stable government policies
B. unpredictable government policies
C. first predictable and then unpredictable government policies
D. None of these.
Answer: A
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In order to increase society's well-being, measles vaccinations might be
a. taxed to discourage production b. subsidized to encourage production c. taxed to encourage production d. subsidized to discourage production e. provided without government intervention
How do spending levels impact the economy in an inflationary period?
A. Overall spending generally remains unchanged. B. Consumers and businesses spend less. C. Consumers spend less, but businesses tend to spend more. D. Consumers keep spending no matter what; businesses are more cautious
The government purchases component of GDP includes:
A. interest payments on government debt. B. purchases of final goods and services. C. transfer payments. D. payments made to social security recipients.
Reductions in the personal income tax, often advocated by supply-siders to increase labor supply and effort, can be expected to also
A. decrease consumption spending. B. increase consumption spending. C. decrease investment spending. D. increase export sales.