In the long run, if we ignore changes in velocity, inflation will:
A. equal money growth plus the growth in potential output.
B. equal money growth less the growth in potential output.
C. equal the rate of money growth.
D. be zero.
Answer: B
Economics
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a. A Pigouvian tax is used to internalize pollution costs b. Transactions costs could reduce the potential for parties in a dispute to reach an efficient agreement c. The assignment of initial property rights affects the equity of a situation d. The "optimal" level of pollution is unlikely to be zero e. The "optimal" level of pollution maximizes industry profits
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Discuss some of the implications of rational expectations
What will be an ideal response?
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