Suppose when the price of hybrid automobiles rises, consumers buy fewer hybrid automobiles. This implies that
A) there is a direct relationship between hybrid automobile prices and quantities purchased by consumers.
B) there is a one-to-one relationship between hybrid automobile prices and quantities purchased by consumers.
C) there is a positive relationship between hybrid automobile prices and quantities purchased by consumers.
D) there is a negative relationship between hybrid automobile prices and quantities purchased by consumers.
D
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In the US we expect that during recessions
a. govt spending will increase b. tax revenues will decrease c. the federal budget will have a deficit d. all
The rational expectations hypothesis suggests that if wages and prices are flexible,
A) unanticipated monetary policy actions can shift the long-run aggregate supply curve but cannot shift the aggregate demand curve. B) anticipated monetary policy actions can affect nominal variables, but not real variables. C) unanticipated monetary policy actions can affect real variables, but not nominal variables. D) growth in the money supply can alter real variables only if the growth is anticipated.