« previous next »

Author Question: What is the difference between the Keynesian and rational expectations theories concerning the ... (Read 62 times)

SGallaher96

  • Hero Member
  • *****
  • Posts: 509
on: Jun 30, 2018
What is the difference between the Keynesian and rational expectations theories concerning the success of stabilization policy?

Question 2

If consumers reduce the purchase of goods whose relative prices rise (substitution bias), the consumer price index (CPI) will tend to have an upward bias over time (overstates inflation).
 a. True
  b. False
  Indicate whether the statement is true or false


aliotak

  • Sr. Member
  • ****
  • Posts: 326
Reply #1 on: Jun 30, 2018
Answer to Question 1

The Keynesians believe that government can affect real GDP and employment. The rational expectationists believe that government stabilization policies have no effect on real GDP or employment. The only effect is on the price level.

Answer to Question 2

True


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Hyperthyroidism leads to an increased rate of metabolism and affects about 1% of women but only 0.1% of men. For most people, this increased metabolic rate causes the thyroid gland to become enlarged (known as a goiter).

Did you know?

Atropine was named after the Greek goddess Atropos, the oldest and ugliest of the three sisters known as the Fates, who controlled the destiny of men.

Did you know?

The human body's pharmacokinetics are quite varied. Our hair holds onto drugs longer than our urine, blood, or saliva. For example, alcohol can be detected in the hair for up to 90 days after it was consumed. The same is true for marijuana, cocaine, ecstasy, heroin, methamphetamine, and nicotine.

Did you know?

All adults should have their cholesterol levels checked once every 5 years. During 2009–2010, 69.4% of Americans age 20 and older reported having their cholesterol checked within the last five years.

Did you know?

Once thought to have neurofibromatosis, Joseph Merrick (also known as "the elephant man") is now, in retrospect, thought by clinical experts to have had Proteus syndrome. This endocrine disease causes continued and abnormal growth of the bones, muscles, skin, and so on and can become completely debilitating with severe deformities occurring anywhere on the body.

Comparison of Major developmental theories Comparison of Major developmental theories
Physiological and evolutionary theories of aging. Physiological and evolutionary theories of aging.
For some Americans, religion is an “easy-going, makes-little-difference” matter, as expressed in ... For some Americans, religion is an “easy-going, makes-little-difference” matter, as expressed in ...
Developmental Theories of Childhood and Adolescence Developmental Theories of Childhood and Adolescence
Math Joke: Be Rational, Get Real Math Joke: Be Rational, Get Real
Difference-Between-Carbohydrates-and-Lipids-infographic Difference-Between-Carbohydrates-and-Lipids-infographic
Video: hGH (protein synthesis, growth and development)

For a complete list of videos, visit our video library