According to the rational expectations theory,
a. on average people have very little idea of what to expect from government policy makers.
b. people form expectations by focusing only on the private sector.
c. people do not consider likely government policies when forming expectations.
d. people form expectations, in part, by considering the probable future effects of changes in government policy.
D
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Who was the economist who first proposed that governments use taxes and subsidies to correct for externalities?
A) Ronald Coase B) A. C. Pigou C) Adam Smith D) David Hume
An elected official:
a. tend to favor policies that yield concentrated benefits and impose dispersed costs b. tend to oppose policies that yield dispersed benefits and impose concentrated costs c. improve his or her chances of re-election by being responsive to special-interest groups d. all of the above