The main policy conclusion of the rational expectations school is that:
a. fiscal policy lags are so long and variable that such policy is worthless, but monetary policy can be helpful.
b. monetary policy lags are so long and variable that such policy is worthless, but fiscal policy can be helpful.
c. both monetary and fiscal policy can be helpful if policy makers correctly anticipate the plans of firms and households.
d. both monetary and fiscal policy can be helpful if firms and households correctly anticipate the plans of policy makers.
e. neither monetary nor fiscal policy can be helpful if firms and households correctly anticipate the plans of policy makers.
e
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Which of the following events occur when fiscal expansion is used without accommodating monetary policy?
A) Total government spending increases (or net taxes decrease). B) Total private induced spending increases. C) Private induced spending decreases. D) A and B are both correct.
MNO Limited publishes a magazine targeted at urban professionals who live on the east and west coasts of the U.S., and all of the magazines are printed at a marginal cost of $0.50 per copy at a publishing plant in Kansas
If the East Coast elasticity of demand for the magazine is -1.25 and the West Coast elasticity of demand is -1.50, what prices should MNO Limited charge for the magazines in these two markets in order to maximize profits? A) Price should be $0.50 in both markets B) Price should be $2.50 on the West Coast and $1.50 on the East Coast C) Price should be $1.50 on the West Coast and $2.50 on the East Coast D) Price should be $0.40 on the West Coast and $0.33 on the East Coast