Under the rational expectations hypothesis, which of the following is the most likely effect of a shift to a more expansionary monetary policy?
a. In the short run, the real rate of output will be unaffected, but in the long run, it will increase.
b. In the short run, the real rate of output will increase, but in the long run, it will be unchanged.
c. There will be a permanent increase in the real rate of output, but the inflation rate will also be a little higher.
d. In the short run, the impact on the real rate of output is uncertain; in the long run, it will remain unchanged.
D
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A $70 price tag on a sweater in a department store window is an example of money functioning as a:
A. unit of account. B. standard of deferred payments. C. store of value. D. medium of exchange.
Refer to the graphs above. Suppose a firm is currently producing 500 computers per week and charging a price of $1000. What happens to the firm's inventory of computers if there is a negative demand shock and prices are flexible?
A.
The firm's inventories will not change
B.
The firm's inventories will increase by 200 computers per week
C.
The firm's inventories will decrease by 150 computers per week
D.
The firm's inventories will increase by 350 computers per week