A difference between the new classical and monetarist models is that expectations in the new classical model are _____ while they are _____ in the monetarist model
a. forward looking; backward looking.
b. rational; adaptive.
c. correct; mistaken.
d. perfectly competitive; imperfectly competitive.
e. both a and b.
E
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A prediction of the Ricardo-Barro effect is
A) a larger decrease in the real interest rate when the government runs a budget surplus. B) no effect on the real interest rate when the government runs a budget deficit. C) a larger decrease in investment when the government runs a budget deficit. D) a larger increase in the real interest rate when the government runs a budget deficit. E) a larger decrease in investment when the government runs a budget surplus.
If a firm is the sole employer of a factor of production, it is known as
A) a monopsony. B) a monopoly. C) an economically discriminating firm. D) a competitor.