Over the past 50 years, the largest increase in average real wage has occurred among ________

The rational expectations hypothesis implies that when macroeconomic policy changes

A) the economy will become highly unstable. B) the way expectations are formed will change. C) people will be slow to catch on to the change. D) people will make systematic mistakes.

A temporary tax cut is not likely to be effective in stimulating aggregate demand if: a. the tax cut is large

b. the MPC is relatively high. c. the economy experiences a contractionary gap. d. the short-run aggregate supply curve is relatively flat. e. people based consumption decisions on their level of permanent income.