The fact that private sector economic agents cannot be systematically fooled by economic policymakers is implied by
A) the Phillips curve.
B) time inconsistency.
C) commitment.
D) the rational expectations hypothesis.
Question 2
The construct of a representative firm is most helpful in describing the behavior of all of the firms in the economy when
A) there are constant returns to scale.
B) there are increasing returns to scale.
C) there are decreasing returns to scale.
D) the marginal product of labor is increasing in the amount of labor input.
