Homework Answers
Using complete information about only the past, agents form expectations about future - False
Long economic adjustments take exact time that agents predicted - False
Aggregate supply is vertical over time - True
Using all information currently available, agents form expectations about future - True
Price adjustments take less time than predicted - False
Fiscal policy like tax cut is highly ineffective - True
Price adjustments happen faster than when prices are sticky - True
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Please identify each statement as true or false if the theory of rantional holds. true Using...
Question 39 The theory of rational expectations holds that Select the correct answer below: people form...
Question 39 The theory of rational expectations holds that Select the correct answer below: people form the most accurate possible expectations about the future they can, using all information available to them. people rationally expect recessions to persist people adapt their expectations based on the past people do not trust their expectations Question 1 Use the aggregate supply (AS) curve and aggregate demand (AD) curve below to determine the equilibrium price level and equilibrium real G DP for this economy....
The statements refer to inflation expectations. Label each statement as either true or false. Each label...
The statements refer to inflation expectations. Label each statement as either true or false. Each label will be used more than once. Expected inflation is equal to the nominal interest rate plus the real interest rate. The survey results of what economists think inflation will be can be used as a measure of expected inflation. true If people expect the price level of goods and services to increase, aggregate demand (AD) increases. If people expect inflation with respect to the...
True or False: The efficient markets hypothesis holds only if all investors are rational. O True...
True or False: The efficient markets hypothesis holds only if all investors are rational. O True O False Almost all financial theory and decision models assume that the financial markets are efficient. The informational efficiency of financial markets determines the ability of investors to "beat" the market and earn excess (or abnormal) returns on their investments. If the markets are efficient, they will react rapidly as new relevant information becomes available. Financial theorists have identified three levels of informational efficiency...
The statements refer to inflation expectations. Label each statement as either true or false. Each label...
The statements refer to inflation expectations. Label each statement as either true or false. Each label will be used more than once. Expected inflation is equal to the nominal interest rate plus the real interest rate. The survey results of what economists think inflation will be can be used as a measure of expected inflation. If people expect the price level of goods and services to increase, aggregate demand (AD) increases. If people expect inflation with respect to the production...
Which of the following statement statements about expectations theory is true? a) Rational expectations theory does...
Which of the following statement statements about expectations theory is true? a) Rational expectations theory does not imply that people always predict inflation correctly. b) Adaptive expectations theory implies that people form expectations on the basis of all available information. C) Rational expectations theory was developed before adaptive expectations theory. D) Adaptive expectations theory identifies prediction errors at random. E) Rational expectations theory implies that people's expectations of future inflation are based on their most recent experience.
Identify the true, false, and uncertain arguments. Economists that favor tax cuts recommend them as a...
Identify the true, false, and uncertain arguments. Economists that favor tax cuts recommend them as a first line of defense during recessions. During the 2008-2009 downturn, the Fed favored monetary policy over fiscal policy In 2009, economists in the Obama administration estimated that the tax cuts multiplier was lower than the multiplier of government purchases Critics of government spending hikes worry about the additional savings brought about by tax cuts The 2008-2009 downturn would have been worse if there had...
Part 1. True or False Questions (5 Points Each) Instruction: Evaluate the statement in each question....
Part 1. True or False Questions (5 Points Each) Instruction: Evaluate the statement in each question. • If a statement is true, mark "True.” • If a statement is false, mark "False," and explain why it is false. 1. If CAPM holds, only the most risk averse investors hold the market portfolio. 2. If the market price of a stock is greater than its intrinsic value, investors should purchase the stock. 3. Diversification is most effective when security returns are...
Identify whether each statement is true or false Answer Bank a. Market power is the ability...
Identify whether each statement is true or false
Answer Bank a. Market power is the ability of a firm to charge a price greater than marginal cost. b. Charging a price greater than marginal cost leads to maximum economic efficiency. c. In reality, few markets are perfectly competitive and some loss of economic efficiency occurs in most markets. d. Most markets are perfectly competitive and economists have found that there is no loss of economic efficiency in the U.S. economy.
Indicate whether each of the following statements is true or false. Questions with more than one...
Indicate whether each of the following statements is true or false. Questions with more than one answer selected will be marked as incorrect. 1.Under IFRS, contingent liabilities should be recorded in the accounts if there is a remote possibility that the contingency will actually occur. True False 2. The classification of a liability as current or non-current is important because it may affect the evaluation of a company’s liquidity. True False 3. The liability of a shareholder is usually limited...
Part 2, True/False, 20 points, 1 point each. Please indicate "T" for true and for false...
Part 2, True/False, 20 points, 1 point each. Please indicate "T" for true and for false in the column to the right 15. A perpetuity must always have a higher value than a common stock because dividends are expected to be paid forever 16. When yield's rise bond and stock values must fall 17. You should always choose the investment with the highest APR (annual percentage rate) even if the number of compounding periods differs. 18. Astock's required return is...
Question 39 The theory of rational expectations holds that Select the correct answer below: people form the most accurate possible expectations about the future they can, using all information available to them. people rationally expect recessions to persist people adapt their expectations based on the past people do not trust their expectations Question 1 Use the aggregate supply (AS) curve and aggregate demand (AD) curve below to determine the equilibrium price level and equilibrium real G DP for this economy....
The statements refer to inflation expectations. Label each statement as either true or false. Each label will be used more than once. Expected inflation is equal to the nominal interest rate plus the real interest rate. The survey results of what economists think inflation will be can be used as a measure of expected inflation. true If people expect the price level of goods and services to increase, aggregate demand (AD) increases. If people expect inflation with respect to the...
True or False: The efficient markets hypothesis holds only if all investors are rational. O True O False Almost all financial theory and decision models assume that the financial markets are efficient. The informational efficiency of financial markets determines the ability of investors to "beat" the market and earn excess (or abnormal) returns on their investments. If the markets are efficient, they will react rapidly as new relevant information becomes available. Financial theorists have identified three levels of informational efficiency...
The statements refer to inflation expectations. Label each statement as either true or false. Each label will be used more than once. Expected inflation is equal to the nominal interest rate plus the real interest rate. The survey results of what economists think inflation will be can be used as a measure of expected inflation. If people expect the price level of goods and services to increase, aggregate demand (AD) increases. If people expect inflation with respect to the production...
Identify the true, false, and uncertain arguments. Economists that favor tax cuts recommend them as a first line of defense during recessions. During the 2008-2009 downturn, the Fed favored monetary policy over fiscal policy In 2009, economists in the Obama administration estimated that the tax cuts multiplier was lower than the multiplier of government purchases Critics of government spending hikes worry about the additional savings brought about by tax cuts The 2008-2009 downturn would have been worse if there had...
Part 1. True or False Questions (5 Points Each) Instruction: Evaluate the statement in each question. • If a statement is true, mark "True.” • If a statement is false, mark "False," and explain why it is false. 1. If CAPM holds, only the most risk averse investors hold the market portfolio. 2. If the market price of a stock is greater than its intrinsic value, investors should purchase the stock. 3. Diversification is most effective when security returns are...
Identify whether each statement is true or false
Answer Bank a. Market power is the ability of a firm to charge a price greater than marginal cost. b. Charging a price greater than marginal cost leads to maximum economic efficiency. c. In reality, few markets are perfectly competitive and some loss of economic efficiency occurs in most markets. d. Most markets are perfectly competitive and economists have found that there is no loss of economic efficiency in the U.S. economy.
Part 2, True/False, 20 points, 1 point each. Please indicate "T" for true and for false in the column to the right 15. A perpetuity must always have a higher value than a common stock because dividends are expected to be paid forever 16. When yield's rise bond and stock values must fall 17. You should always choose the investment with the highest APR (annual percentage rate) even if the number of compounding periods differs. 18. Astock's required return is...
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