People Combining the Effects of Past Policy Changes on Important

question 69

Multiple Choice

People combining the effects of past policy changes on important economic variables with their own judgment about the future effects of current and future policy changes is consistent with

• A) frictional unemployment.
• B) the rational expectations hypothesis.
• C) active policy making.
• D) passive policy making.

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Definitions:

Protected Industry

An industry that receives government support through measures like tariffs, quotas, and subsidies to shield it from foreign competition.

Productivity Growth

An increase in the efficiency of producing goods and services, typically leading to economic growth.

Resource Cost

The total cost of all inputs used in the production of goods or services, including raw materials, labor, and capital. It reflects the expenditure needed to create and bring a product or service to the market.

Trade

The exchange of goods and services between individuals or entities, typically referring to international trade involving the movement of products across borders.