Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers

The rational expectations hypothesis suggests that

A) people are creatures of habit and tend not to change their economic behavior in the short run. B) people are rational if they make forecasts about economic activity. C) people use all available information to make forecasts about future economic activity and adjust their behavior to these forecasts. D) people use all available information to make forecasts about future economic activity but often fail to adjust their behavior to these forecasts.

Foreign-exchange market interventions will always

A) lead to a decline in domestic interest rates relative to foreign interest rates. B) lead to a rise in domestic interest rates relative to foreign interest rates. C) lead to a decline in the domestic money supply. D) alter a central bank's holdings of international reserves.