The Lucas critique is an objection to the assumption that
A) inflation is always and everywhere a monetary phenomenon.
B) there is a negative relationship between inflation and unemployment.
C) historical relationships between macroeconomic variables will continue to hold after new policies are in place.
D) people form expectations rationally.
C
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Open market purchases ________ reserves and the monetary base thereby ________ the money supply
A) raise; lowering B) raise; raising C) lower; lowering D) lower; raising
According to the law of diminishing marginal utility, the marginal utility for a particular product
A) remains constant, regardless of how much of the product is consumed. B) remains constant as long as the product is still considered useful. C) decreases as more of the product is consumed. D) increases as more of the product is consumed.