The rational-expectations hypothesis suggests that the forecasts that people make concerning future inflation rates
A. consistently underestimate the actual rate of inflation in the future.
B. consistently overestimate the actual rate of inflation in the future.
C. are always correct.
D. are correct on average, but are subject to errors that are distributed randomly.
Answer: D
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When firms are able to increase the amount of physical capital available to workers, the
a. marginal product of labor will decrease. b. value of the marginal product of labor will decrease. c. value of the marginal product of labor will increase. d. final product price will increase.
Assume that you set up a sole proprietorship and your lawyer tells you that as the owner, you could stand to lose your personal wealth if the business goes bankrupt. This means that a sole proprietorship
A) faces limited liability. B) faces unlimited liability. C) has little chance of succeeding. D) is not a good type of business to set up.