Assume that many households and businesses reduce their spending only because they expect other households and consumers to reduce their spending. Also suppose that all households and consumers would be better off if they did not reduce their spending
This situation best describes the:
A. real-business-cycle theory.
B. rational expectations theory.
C. concept of coordination failures.
D. adaptive expectations theory.
C. concept of coordination failures.
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What are options for monetary easing using interest rate policy instruments when the rate has hit the zero lower bound?
a. At that point, interest rate policy cannot be used. b. Monetary easing can still occur whenever interest rates are greater than zero at the retail level. c. The central bank can increase the money supply, and interest rates can be less than zero. d. Borrowing can be stimulated in ways other than lower rates of interest.
Antitrust laws allow the U.S. government to do all of the following except _____.
(A) Stop firms from selling new products. (B) Watch and regulate industry. (C) Break up existing monopolies. (D) Stop firms from forming monopolies.