If the actual rate of inflation turns out to be higher than the expected rate of inflation, what happens to the growth rate of output before expectations are updated?
What will be an ideal response?
The growth rate is higher than the Solow growth rate.
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Nominal GDP is $10,000 billion in 2011, but real GDP is only $9,000. It follows that:
a. the GDP deflator is equal to 111 b. the GDP deflator is equal to 100. c. the GDP deflator is equal to 90. d. prices must have decreased relative to the base year.
Assume that a decline in consumer demand occurs in a purely competitive industry that is initially in long-run equilibrium. We can:
A. predict that the new price will be greater than the original price. B. predict that the new price will be less than the original price. C. predict that the new price will be the same as the original price. D. not compare the original and the new prices without knowing what cost conditions exist in the industry.
A temporary beneficial productivity shock would
A. increase the expected future marginal product of capital. B. increase future income. C. shift the labor supply curve down and to the right. D. increase the level of employment.
Suppose that average labor productivity in Country C is $6,000, and that Countries C and A have the same real GDP per capita. Based on the information in the table, what must be the average labor productivity in Country A?CountryPopulation (millions)Share of Population Employed (%)A10060B15055C7550D25045E9540
A. $2,400 B. $1,800 C. $5,000 D. $7,200