Of the following examples, which would most likely be performed by an economist working for the U.S. Federal Trade Commission?
A) forecasting employment trends in New England
B) assessing whether Amazon should build its new headquarters in New York or Texas
C) analyzing data related to a potential merger of two companies
D) using economic models to forecast future inflation rates.
Answer: C
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If expectations are rational, the difference between the actual inflation rate and the forecast for inflation is: a. positive when inflation is increasing
b. negative when inflation is increasing. c. random. d. greater, the more accurately people anticipate the effects of government policy.
Exhibit 4-3 Supply and demand curves
Initially the market shown in Exhibit 4-3 is in equilibrium at P2, Q2 (E2). Changes in market conditions result in a new equilibrium at P2, Q4 (E4). This change is stated as a(n):
A. increase in supply and an increase in demand. B. increase in supply and a decrease in demand. C. decrease in demand and a decrease in supply. D. increase in demand with supply held constant at S2.
Let the consumption function be represented by the following equation: C = c0 + c1YD. For this equation, we assume that c1 is
A) negative. B) larger than c0. C) different at different levels of income. D) equal to one. E) none of the above
If in Switzerland in January, 2009 the CPI was 187.4 and in January, 2010 it was 191.1, then the inflation rate in 2010 was
A) 1.9 percent. B) 3.7 percent. C) -1.9 percent. D) unknown without the base period index number. E) unknown without the real prices.