The highest amount of output an economy can sustainably produce and sell using existing production processes and resources is called:
A. nominal output.
B. potential output.
C. actual output.
D. utilized output.
Answer: B
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Refer to Figure 16-1. Suppose the economy is in short-run equilibrium below potential GDP and no fiscal or monetary policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from
A) A to E. B) A to B. C) B to A. D) B to C. E) C to B.
Air quality in most U.S. cities has ____ since World War II.
A. worsened B. improved C. remained unchanged D. improved slightly before a recent deterioration
From the Fisher equation we see that the nominal interest rate and expected inflation have:
A. an inverse relationship. B. a relationship which is direct and one-to-one. C. no relationship. D. a relationship which is direct but less than one-to-one.
The consumer price index and the GDP deflator are two alternative measures of the overall price level. Which of the following statements about the two measures is correct?
a. The two measures are constructed differently, but they always indicate the same inflation rate. b. The substitution bias applies equally to both measures. c. A change in the price of Korean televisions is reflected in the U.S. consumer price index but not in the U.S. GDP deflator. d. All of the above are correct.