How would the Keynesian, Monetarism & Ration Expectations Theory school of thought respond to the following:
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1a) If you are explaining the theory of rational expectations to a friend, you would say that the change in an agents’ expectations is ________ and therefore ________ the effectiveness of monetary or fiscal policy. A) Say’s Law B) short-run economics C) Keynesian economic 1b) If you are explaining the theory of rational expectations to a friend, you would say that the change in an agents’ expectations is ________ and therefore ________ the effectiveness of monetary or fiscal policy. A)slow;...
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.
"Current economic parameters are determined by past rational expectations" is a property of the__________ school of thought. monetarist real business cycle rational expectations/new classical New Keynesian classical Y in the equation of exchange equals: nominal GDP. velocity. real GDP. money stock. The (original) Keynesian primary policy for a recession is: increasing money supply/decreasing interest rates. decreasing the money supply/increasing interest rates. increasing government spending/cutting taxes. increasing government spending/increasing money supply. increasing government spending/raising taxes. Per class notes, Supply side economics is best...
Use Keynesian Fiscal Theory only (Keynesian Cross of positive AD and AS) to answer the following questions: Would you recommend a Balance Budget Multiplier method to bring the economy from a recession to non-inflationary full employment level? Why? PLS HELP ME, Need to show my professor I can respond to his question confidently! thank you so much in advance
1. Paul Krugman is a: monetarist economist. real business cycle economist. rational expectations economist. supply-side economist. Keynesian economist. 2. The (original) Keynesian primary policy for a recession is: increasing money supply/decreasing interest rates. decreasing the money supply/increasing interest rates. increasing government spending/cutting taxes. increasing government spending/increasing money supply. increasing government spending/raising taxes. 3. The original classical school dominated macro economic thinking: 1800s to 1933. 1759-1793. 1997-2017. 1933-1980.
What are the problems with the Rational Expectations-UIP theory?
Questions regarding rational expectations, thank you!: 1.) Which of the following statements about rational expectations is not true? a.) Rational expectations are different from adaptive expectations b.) Rational expectations are identical to optimal forecasts c.) Rational expectations may not be accurate d.) Rational expectations theory suggests that forecasts errors of expectations are sizable and can be predicted 2.) Suppose that the average growth rate of the economy has been 2%. Given a forecast of 4% growth this year, if rational...
The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate future short-term interest rates.Based on the pure expectations theory, is the following statement true or false?The pure expectations theory assumes that investors do not consider long-term bonds to be riskier than short-term bonds.TrueFalseThe yield on a one-year Treasury security is 4.6900 %, and the two-year Treasury security has a 6.3315 %yield. Assuming that the pure expectations theory is correct, what is the...
Question 1: Expectations Theory Martha is a great believer in the expectations theory of the term structure rates. She thinks that the interest rate for the bond XYZ that matures in three periods must be equal to 7%. Adam, at the same time, is a proponent of the liquidity premium theory. He believes that the correct interest rate for the XYZ is 10%. Find the liquidity premium and expected interest rate for the third year if the expected interest rate...
Select one of the following schools of economic thought: Keynesian, Chicago, and Austrian. Identify three keys points or beliefs that are held by that particular school. What are the macroeconomic policy implications of those beliefs? Explain your answer. Which school of economic thought do you find to be most convincing? Why?