Within the aggregate demand-aggregate supply framework, a strict interpretation of rational expectations theory suggests that a change in aggregate:
A. Demand will have a large effect on the price level, but a small effect on output
B. Demand will have a small effect on the price level, but a large effect on output
C. Demand will have a large effect on the price level, but no effect on output
D. Supply will have a large effect on the price level, but no effect on output
C. Demand will have a large effect on the price level, but no effect on output
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A decrease in wealth would cause the IS curve to
A) shift up and to the right. B) shift down and to the left. C) remain unchanged. D) shift up and to the right only if people face borrowing constraints.
Central planning is an efficient method for making coordination decisions.
Answer the following statement true (T) or false (F)
In the basic closed-economy ISLM model, the goods market can be described by the
A) consumption function. B) investment function. C) government spending and tax. D) goods market equilibrium condition. E) all of the above.
An example of a way employers can minimize moral hazard is to:
A. monitor employees' computer activity. B. videotape the workplace. C. offer bonuses for consistent productivity. D. All of these are ways to minimize moral hazard.