The hypothesis suggesting that people combine the effects of past policy changes on economic variables with their own judgment about the future effects of current and future economic policy is referred to as the
A) passive expectations hypothesis. B) adaptive expectations hypothesis.
C) rational expectations hypothesis. D) active expectations hypothesis.
Question 2
Suppose the government's initial debt is 425 billion. If for the next three years the government runs deficits of 150, 125, and 200 billion, the government's total debt at the end of the three years will be
A) -50 billion. B) 50 billion. C) 475 billion. D) 900 billion.
