Rational expectations imply that households and firms

Assignment Help Business Economics

Reference no: EM13898504

Rational expectations imply that households and firms are forward looking. What does that say about the importance of a short-run downturn in demand for firm decisions? Explain why firms might hold excess labor and capital during a recession. Explain why long-term investment projects might continue even during a recession.

Reference no: EM13898504

Questions Cloud

Financed after the trust fund is entirely depleted : Why is the current structure of benefits and funding for U.S. Social Security expected to be unsustainable without an increase in the payroll tax rate or a decrease in pension benefits? b. If there is no reform in U.S. social security laws the benefi..

About the slope or shape of the aggregate supply curve : What do classical economists believe about the slope or shape of the Aggregate Supply curve? More traditional economists would refer to this AS curve drawn by the classical economist as the _____ ______ Aggregate Supply curve? What do classical econo..

About importance of supply shocks relative to demand shocks : How does rational expectations affect our perceptions concerning the speed or rate at which an economy moves back to potential. What does this say about the importance of supply shocks relative to demand shocks? Explain please.

Initially in long run macroeconomic equilibrium : Suppose that the U.S. economy is initially in Long Run Macroeconomic Equilibrium. An increase in the corporate income tax rate will lead the U.S. ____ curve to shift and create a(n) ____.

Rational expectations imply that households and firms : Rational expectations imply that households and firms are forward looking. What does that say about the importance of a short-run downturn in demand for firm decisions? Explain why firms might hold excess labor and capital during a recession. Explain..

Difference matter for actual business decisions : What is the difference between economic profits and accounting profits, and how does this difference matter for actual business decisions?

Perfect competition is market in which there are many firms : Perfect competition is a market in which there are many firms, each selling an identical product; many buyers; no barriers to the entry of new firms into the industry; no advantage to established firms; and buyers and sellers are well informed about ..

What is the permanent income hypothesis : What is the permanent income hypothesis? What are precautionary savings?

Postmerger herfindahl-hirschman index increase : Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl-Hirschman inde..

User Account

All Pages