As the service sector in the U.S. economy grows, traditional productivity measures will become:
a. biased downward, because the qualitative aspects of a service tend to be understated.
b. biased upward, because quantitative improvements in the service sector tend to be overstated.
c. biased upward, because prices in the service sector always rise faster than prices in manufacturing.
d. biased downward, because service output leads to a long-run decline in the inflation rate.
e. completely inappropriate for measuring even manufacturing output.
a
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In the Keynesian model, interest rates are determined by
A) aggregate demand and aggregate supply. B) saving and investment. C) the demand for and supply of money. D) the velocity of money.
A nation's economic growth is more rapid when
A) special interest groups acquire the political power to restrict competition. B) capital resources are devoted to their most efficient use. C) there are barriers to establishing legal ownership of capital resources. D) scarce resources are made available for all citizens free of charge.
If the economy is at potential output, the price level can continue to increase
a. True b. False
A soil bank program pays farmers not to grow food on some of their land
Indicate whether the statement is true or false