Rational expectations theory suggests that government or central bank policies designed to change aggregate demand will be effective

Someone who values a lottery at its expected value is

a. A risk lover b. Risk neutral c. Risk averse d. most likely to play a lottery

Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real GDP and the nominal value of the domestic currency in the context of the Three-Sector-Model? a. Real GDP rises and nominal value of the domestic currency

falls. b. Real GDP falls and nominal value of the domestic currency remains the same. c. Real GDP rises and nominal value of the domestic currency remains the same. d. Real GDP rises and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.