Question

If people have rational​ expectations, A. on​ average, all markets will​ clear, and there will be...

If people have rational​ expectations,

A. on​ average, all markets will​ clear, and there will be full employment.

B. unemployment can last for a significant period of time.

C. anticipated policy changes will have a significant effect on output.

D. aggregate supply will​ increase, creating economic growth

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

(A) Rational expectations is the theory which states that in an economy all agents are have perfect information about all predictions and anticipations and use this information to make their economic decisions. Acc. to this theory anticipated changes in policy cant change output by much because all economic agents make their decision taking into account this anticipated policy.

Thus If people have rational​ expectations, on​ average, all markets will​ clear, and there will be full employment.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Question: Question 5 (1 point) According to the rational expectations theory, Question 5 options: A) sticky...
Question: Question 5 (1 point) According to the rational expectations theory, Question 5 options: A) sticky prices and wages are the primary source of short-run unemployment. B) only unanticipated policy changes can affect output and employment. C) the economy always self-corrects to full employment with little or no inflation. D) real wages may vary widely in the long run. Question 6 (1 point) In 1962, President Kennedy persuaded U.S. steel manufacturers to lower their prices. This technique of verbally pressuring...
Each scenario should have a graph and a written response. A stock market collapse that hurts...
Each scenario should have a graph and a written response. A stock market collapse that hurts consumer and business confidence; as a result, the economy falls into the flat aggregate supply zone. Extremely rapid growth of exports. Currently, the economy is producing at full employment. Rising inflation concern. Currently, the economy is producing at the intermediate zone of the aggregate supply curve. A rise in oil prices and inputs costs. Make your own assumption of the original equilibrium. Sketch AD-AS...
3.   When the unemployment rate is above the natural rate then inflationary expectations fall and we...
3.   When the unemployment rate is above the natural rate then inflationary expectations fall and we move to lower short run Phillip’s curves. The opposite occurs when we are operating below the natural rate. You must draw a graph for this question. 4.   Excess reserves are at about $2.5 trillion. As soon as banks begin to loan out this money we are going to experience hyperinflation. 5. Graph only. Label Axes, all curves and equilibrium. Explain briefly every curve shift....
11.   Demand-pull inflation occurs when the aggregate __________ curve shifts _______. A.   demand, right B.    demand, left C.    supply, right...
11.   Demand-pull inflation occurs when the aggregate __________ curve shifts _______. A.   demand, right B.    demand, left C.    supply, right D.   supply, left 12.   When the aggregate price level decreases, the resulting decrease in interest rates will most likely ___________ investment and _____________ consumption. A.   increase, increase B.    increase, decrease C.    decrease, increase D.   decrease, decrease 13.   The economy is operating at full capacity.  The long-run aggregate supply curve is __________.  In the long run, an increase in the aggregate price level will __________ output. A.   horizontal, increase B.    horizontal, not change C.    vertical, increase D.   vertical,...
3. Answer the following by looking at the article: Macroeconomics: Schools Of Thought By Stephen D....
3. Answer the following by looking at the article: Macroeconomics: Schools Of Thought By Stephen D. Simpson, CFA The field of macroeconomics is organized into many different schools of thought, with differing views on how the markets and their participants operate. Classical Classical economists hold that prices, wages and rates are flexible and markets always clear. As there is no unemployment, growth depends upon the supply of production factors. (Other economists built on Smith's work to solidify classical economic theory....
Which of the following is not correct? a. Deficits give people the opportunity to consume at...
Which of the following is not correct? a. Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so. b. A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth. c. The U.S. debt per-person is large compared with average lifetime income. d. Current spending may benefit future generations. A favorable supply shock causes the price level to...
Explain whether each of the following events would increase, decrease, or have no effect on the...
Explain whether each of the following events would increase, decrease, or have no effect on the short-run aggregate demand curve: a. A decrease in the U.S. price level makes American goods more attractive to foreign buyers. b. Households decide to consume a larger share of their income. c. Worsening profit expectations cause firms to decrease their expenditures on new machinery and equipment. d. As the price level declines, the purchasing power of currency increases, and thus Americans increase their purchases...
Assume that people form expectations rationally and that the sticky-price model describes the aggregate supply curve...
Assume that people form expectations rationally and that the sticky-price model describes the aggregate supply curve in the economy. For each of the following scenarios explain whether or not monetary policy can have real effects on the economy. A. The central bank determines monetary policy using the same information available to all firms and at the same time firms are setting prices, so that both firms and policymakers have all of the same information. B. The central bank determines monetary...
Question 31 pts According to the monetarists the supply of money changes in response to changes...
Question 31 pts According to the monetarists the supply of money changes in response to changes in the levels of real output and prices. changes in the velocity of money drive the level of economic activity. expansionary fiscal policy will lower interest rates and thereby stimulate investment and consumption. changes in the money supply are the primary cause of changes in the price level. Flag this Question Question 41 pts New classical economists believe that government regulation of businesses is...
17. The government implements monetary policy and fiscal policy in order to: a. offset the shifts...
17. The government implements monetary policy and fiscal policy in order to: a. offset the shifts in aggregate demand and thereby eliminate unemployment. b. offset shifts in aggregate demand and thereby stabilize the economy. c. enhance the shifts in aggregate demand and thereby create fluctuations in output and employment. d. enhance the shifts in aggregate demand and thereby increase economic growth 20. Which of the following is a way the Fed can change the money supply? a. changing how much...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT