Which of the following is NOT an inference of the rational expectations hypothesis?
A. Government policy actions that are anticipated have no real effects in the short run.
B. Government policy actions have no real effects in the short run unless the actions are unanticipated.
C. Government policy actions have no real effects in the long run.
D. Government policy actions that are unanticipated have no monetary effects in the short run.
Answer: D
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According to economic theory, a politician
A) expands activities whose marginal benefit exceeds marginal cost. B) contracts activities whose marginal cost exceeds marginal benefit. C) does not necessarily act on narrow or selfish interests. D) does all of the above. E) does none of the above.
How does U.S. gross domestic product (GDP) differ from U.S. gross national product (GNP)?
a. GNP = GDP - losses from depreciation b. GNP = GDP + income earned by U.S. citizens abroad - income that foreign citizens earned in the U.S. c. GNP = GDP + transfer payments to households + - indirect sales taxes d. GNP = GDP - depreciation - retained earnings