According to the new classical macroeconomists, each of the following statements is true EXCEPT:
A) Disinflation will be harder to bring about because of the time-inconsistency problem.
B) Policymakers are tempted to deviate from the preannounced policy once the public changes its expectations.
C) Feedback rules are preferred to discretionary rules.
D) Disinflation will be painless if the restrictive policies announced by the government are credible.
C
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This chapter introduces the idea of opportunity cost
a. What is meant by opportunity cost? How are the opportunity costs of various choices compared? b. What is the opportunity cost of taking a year after graduating from high school and backpacking across Europe? Are people who do so being irrational?
When OPEC's manipulation of oil supplies in 2000 doubled the price of energy, according to the AS/AD model, the
a. aggregate supply curve shifted to the right b. aggregate supply curve shifted to the left c. the aggregate demand curve shifted to the right d. aggregate demand curve shifted to the left e. price level in the economy fell