The theory of bounded rationality states that it is likely for consumers to have perfect information

Moral hazard occurs ________ an agreement is made and when monitoring the parties to the agreement is ________

A) before; easy B) before; costly C) after; easy D) after; costly

Refer to Figure 12.3. Suppose the economy is initially at full employment with real GDP equal to potential GDP, and the Fed does not target interest rates, allowing the real interest rate to change like it did during the Great Depression. This would be reflected as a movement from ________ in the IS-MP model and ________ the Phillips curve.

A) point Y to point X; a movement up B) point X to point Y; a movement down C) point Z to point Y; a movement up D) point Y to point Z; a movement down