Which of the following helps determine the growth rate of potential GDP?
I. capital accumulation
II. technology advances
III. growth in the quantity of money
A) I
B) I and II
C) I and III
D) I, II and III
B
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Which of the following implies that a model is an approximation?
A) The model is not based on any assumption. B) The predictions of the model are mostly wrong. C) The predictions of the model will hold in most cases but not all. D) The predictions of the model cannot be tested with data.
According to economists of the rational expectations school, _____
a. the passive approach must be adopted because they believe the economy is too complex b. individual forecasts about policies can never be right c. anticipated monetary policy can affect the output level d. discretionary policy can stabilize the economy e. discretionary policy should be completely avoided
If the economy were producing at point E and moves to point D,
A. resources will shift from producing capital goods to producing consumer goods.
B. resources will shift from producing consumer goods to producing capital goods.
C. more capital goods can be produced without any sacrifice in consumer goods production.
D. more consumer goods can be produced without any sacrifice in capital goods production.
Who is hurt and who benefits from inflation? Why?