Country A specializes in the production of automobiles and 45% of its population works in the automobile manufacturing industry. A sharp increase in world prices for automobiles led to a boom in the automobile manufacturing industry in Country A
However, the automobile manufacturers overestimated the demand for automobiles. This led to overproduction which resulted in a large stock of unsold cars. Which of the following is likely to happen in the near future?
A) Investment in Country A will increase.
B) The supply of credit in Country A will increase.
C) Household consumption in Country A will increase.
D) The unemployment rate in Country A will increase.
D
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Suppose someone told you that the chain-weighted price index for GDP in a country was 135. Why does this fact not convey much information to you?
What will be an ideal response?
If the economy is in equilibrium with real GDP less than potential GDP, there is ________ gap, and a fiscal policy that ________ is appropriate
A) a recessionary; decreases aggregate demand B) an inflationary; increases aggregate demand C) a recessionary; increases aggregate demand D) an inflationary; decreases aggregate demand E) a recessionary; increases potential GDP
Which of the following factors is fixed in the long run?
A) capital B) land C) entrepreneurship D) none of the above because all factors are variable in the long run
The FOMC "Statement on Long-Run Goals and Monetary Policy Strategy"made it clear that the Federal Reserve would be pursuing ________, consistent with its dual mandate
A) a flexible form of inflation targeting B) a strict form of inflation targeting C) a zero inflation targeting D) an implicit inflation targeting