Author Question: The proponents of adaptive expectations believe that: a. there will be a substantial time lag ... (Read 11 times)

ETearle · **on:** Jun 30, 2018

The proponents of adaptive expectations believe that:
a. there will be a substantial time lag before people anticipate the effects of a shift to a more expansionary macro-policy.
b. macro-policies that stimulate demand and place upward pressure on the general level of prices will temporarily increase output and employment.
c. discretionary changes in macro-policy can be made in a manner that will reduce the economic ups and downs of a market economy.
d. all of these are true.

Question 2

Suppose we shopped for a basket of goods in Year 1 and it cost 350 . Suppose the same basket of goods adds up to 385 in Year 2 . If we use Year 1 as a base year, what would be the Year 2 CPI?
a. 35.
b. 90.
c. 100.
d. 110.
e. 135.