The chain-weighted index for GDP and the CPI differ in that the CPI:
A. excludes price changes from used and imported goods while the chain-weighted index includes these price changes.
B. asks how much a fixed basket of goods costs in the current year as compared to the cost of those same goods in a base year while the chain-weighted index takes an average of price changes using base years from neighboring years.
C. is calculated by the Commerce Department while the chain-weighted index is calculated by local newspapers.
D. is calculated in nominal terms and the chain-weighted index is calculated in real terms.
Answer: B
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Bank lending and deposits tend to change as interest rates change. Can the Fed counteract this tendency?
a. Yes, through its ability to affect the money supply. b. Yes, through its ability to change tax levels. c. No, the Fed is forbidden by the Constitution from intervening in the economy. d. No, the Fed almost always follows a passive monetary policy.
The convergence theory predicts that:
A. countries that start out poor should initially grow faster than ones that start out rich, but will eventually slow to the same growth rate. B. poor countries are not generally expected to sustain a high growth rate and surpass the existing rich countries. C. even if countries differ in their rates of savings, population growth, and other features, they will still converge to the same growth rate, although not the same level of income. D. All of these are predicted by the convergence theory.
The primary means by which a farmer can protect against weather-related crop failure is with
A. stock markets. B. overtime labor. C. bond markets. D. crop insurance.
Explain whether each of the following variables is a lagging, leading, or coincident indicator: In each case, is the economy likely in a recession, heading for a recession, in an expansion, or heading for an expansion?
a. Industrial production is falling. b. The number of building permits issued for new private housing units begins to decline. c. The number and amount of commercial and industrial loans start to rise. d. The average prime interest rate charged by banks begins to fall. e. The M2 money supply begins to rise.