Which of the following statements best describes the rational expectations hypothesis?
A) Individuals will not enter into long-term agreements unless they are certain about the payments they will receive.
B) It is likely that individuals will consistently make errors.
C) Individuals will make random errors, independent of previous errors.
D) It is reasonable to expect individuals to consistently underestimate the level of inflation.
C
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Which one of the following is a way to get out of a repeated Prisoner's Dilemma Nash Equilibrium?
a. Do not be provoked b. Do not be easily provoked c. Be easily provoked d. All of the above
If Japanese tourists visit Disney World, what is the effect in the foreign exchange market?
a. It will increase demand for Japanese yen. b. It will decrease demand for Japanese yen. c. It will increase supply of Japanese yen. d. It will decrease supply of Japanese yen.