If Firms and Workers Have Rational Expectations, Including Knowledge of the Policy

question 36

Multiple Choice

If firms and workers have rational expectations, including knowledge of the policy being used by the Bank of Canada, the short-run Phillips curve will be

• A)negatively sloped.
• B)positively sloped.
• C)vertical.
• D)flatter in the long run than it is in the short run.
• E)steeper in the short run than it is in the long run.

Understand how technological improvements affect supply, prices, and quantities in the market.

Define productive and allocative efficiency and differentiate between them.

Assess how changes in determinants of demand and supply, such as consumer income or resource prices, affect market equilibrium.

Explain the impact of changes in the prices of substitute goods on the demand for a product.

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Definitions:

Organization

pertains to a structured group of people with specific roles and duties working together to achieve common goals or objectives, often in a coordinated and systematic manner.

Direction

Guidance or supervision on how to perform tasks or the course along which something moves or is aimed to move.

Cognitive Dissonance Theory

A psychological theory suggesting that individuals experience discomfort when holding contradictory beliefs and are motivated to reduce this dissonance by changing their attitudes or behaviors.

Postdecisional Dissonance

Psychological discomfort experienced after making a difficult decision, often leading to regret or questioning of the choice.