Potential GDP
A. measures the maximum that a firm is capable of production
B. increases ove time as the labor force grows
C. increases over time as technological change occurs
D. All of the above
E. B and C only
Answer: E. B and C only
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The consumer price index (CPI) _____ inflation because it includes an item in the market basket only after the product becomes _____
a. overstates; unpopular b. overstates; obsolete c. overstates; widely used d. understates; widely used e. understates; obsolete
Official figures indicate that the percentage of persons below the poverty level in the U.S. is more today than it was in 1959
a. True b. False Indicate whether the statement is true or false
An absolute poverty line is usually set based on:
A. the lowest quartile of income earners in a society. B. the lowest 1 percent of all income earners in a society. C. a certain percentage below the average income in a society. D. the cost of certain essential goods.
Which of the following is an argument of opponents of devaluations?
A) Devaluations cause relatively slow adjustments. B) Participants in foreign exchange markets have a short memory: if the expected devaluation doesn't occur within a short time-period, they will stop expecting it. C) A devaluation causes a nation with fixed exchange rates to lose credibility in the medium run, driving its interest rate higher. D) all of the above E) none of the above