Which of the following would be a violation of the rational expectations assumption?
A) "Over the past twenty years, people have consistently under-predicted the inflation rate for the following year."
B) "Over the past twenty years, people have never once accurately predicted the inflation rate for the following year."
C) "The Fed's announcement that it might ease interest rates caused an immediate drop in short-term rates, even before the Fed took any action."
D) all of the above
E) none of the above
A
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Trade dollarization refers to the phenomenon of:
a. the practice of insisting on trade in U.S. dollars. b. the fact that many international commodities are traded in U.S. dollars only. c. the fact that many dollars have flowed out of the U.S. and are used in other nations as their national currency. d. the falling dollar combined with a rising trade balance.
"Because the price of a diamond is much greater than the price of a gallon of water, the consumer surplus from diamonds is greater than the consumer surplus from water." Is the previous analysis CORRECT? Explain your answer
What will be an ideal response?