Which of the following would NOT cause the demand curve for bonds to shift?
A) a change in wealth
B) a change in the price of bonds
C) a change in the liquidity of bonds
D) a change in expected inflation
B
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The excess capacity theorem states that
a. society is worse off with fewer monopolistic competitors. b. costs of production under monopolistic competition can be lowered by reducing the number of producers. c. lack of excess capacity leads to shortages during periods of unexpected growth in demand for goods produced by monopolistic competition. d. there is too much choice in our economy.
The rational expectations hypothesis implies that use of discretionary macro-policy as a stabilization tool will
a. be ineffective, even in the short run. b. be effective in the short run but ineffective in the long run. c. be effective both in the short run and long run. d. make it possible to trade-off a higher rate of inflation for a lower rate of unemployment.