The rational expectations hypothesis suggests that if wages and prices are flexible,
A) unanticipated monetary policy actions can shift the long-run aggregate supply curve but cannot shift the aggregate demand curve.
B) anticipated monetary policy actions can affect nominal variables, but not real variables.
C) unanticipated monetary policy actions can affect real variables, but not nominal variables.
D) growth in the money supply can alter real variables only if the growth is anticipated.
B
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Which statement best describes the relationship between scarcity and shortage?
A) Neither scarcity nor shortages will exist if money prices are allowed to determine who gets what. B) Scarcity and shortages are unavoidable as long as money prices are allowed to determine who gets what. C) Scarcity is an inescapable fact of life but shortages are avoidable. D) Shortages are an inescapable fact of life but scarcity can be eliminated.
Which of the following is an example of money functioning as a medium of exchange?
A) Walmart accepting your $20 when you buy a Blu-ray. B) Apple pricing an iPhone at $299. C) Bank of America paying you 3 percent on your saving account. D) You saving your spare change in a jar before depositing them in your savings account.