If market participants have rational expectations,
A) they can assume the stock prices they observe represent the fundamental values of those stocks
B) they know to purchase stocks that are priced below their fundamental value
C) they will achieve higher returns than those with adaptive expectations
D) they can earn above-average returns on their investments
A
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Evidence suggests that as the amount of market power possessed by the firms in an industry increases, the amount of X-inefficiency will decrease
Indicate whether the statement is true or false
According to Ricardian Equivalence, a tax cut will not have a material impact on consumption spending since ________
A) households will simply save the monies received from the tax cut B) the value of the tax multiplier is one C) a tax cut must lead to an increase in prices, which leaves the real value of consumption unchanged D) a decrease in taxes will be balanced, under current federal law, by a government spending increase