Answer the following statements true (T) or false (F)
1. Rational expectations theory suggests that people make consistent forecasting errors regarding the effects of policy.
2. Mainstream economists contend that monetary policy tends to be destabilizing, in contrast to monetarists who believe that monetary policy is a stabilizing factor.
3. An efficiency wage is an above-market wage that spurs greater work effort and gives the firm more profits because of lower wage costs per unit of output.
4. The "efficiency wage" is one possible explanation for rigidities in the economy that leads to economic instability.
5. Monetarists recommend that the supply of money should be increased at a constant rate each year, proportionate with the long-run growth of real output.
1. F
2. F
3. T
4. T
5. T
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In 1879 . President Rutherford B. Hayes had the first telephone installed in the White House, but it was rarely used because:
a. he didn't know what it was b. it kept breaking and no one could fix it c. hardly anyone else in Washington had a telephone, so there was no one to call or to call in d. hand written letters were considered a more correct form of correspondence
The difference between the long-run and short-run frameworks is that the long-run framework focuses on demand while the short-run framework focuses on supply.
Answer the following statement true (T) or false (F)