The theorists of the rational expectations school:
a. favor monetary rules because they believe individuals know too little about how the economy works
b. favor monetary rules so that workers and firms do not get any unanticipated surprises from the Fed.
c. are those who favor an "active approach" to policy and reject monetary rules.
d. oppose any monetary rules because they believe rules impede the natural self-correcting mechanism of the economy.
e. do not believe in implementing discretionary policies.
b
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Two games that differ only in the timing of moves—one simultaneous, the other sequential move—can sometimes have completely different subgame-perfect equilibria. Why?
a. The second mover to choose non-credible threats. b. The first mover can choose an action that it would deviate from if its action were secret. c. Subgame-perfect equilibrium cannot be applied to simultaneous games. d. All of the above.
Which of the following statements is false?
A. In recent years, the United States has had large annual trade deficits in goods and services. B. The United States imports some of the same categories of goods as it exports. C. China has the largest share of world exports. D. As a percentage of GDP, U.S. exports are the highest among the industrially advanced nations.