A new chain-weighted measure of real GDP
a. was introduced by the Bureau of Economic Analysis in 1995.
b. uses the average of prices in a given year and prices in the previous year instead of using prices in a base year as weights.
c. differs greatly from previous measures that utilized the base year method.
d. Both a and b
e. All of the above
D
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If demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the
A) AS curve shifts rightward. B) potential GDP line shifts rightward. C) AS curve shifts leftward. D) potential GDP line shifts leftward. E) None of the above is correct because demand-pull inflation shifts only the aggregate demand curve.
Some economists have argued that path dependence and switching costs can lead to market failure. Which of the following is an example of this argument?
A) VHS video recorders became more popular with consumers than Sony Betamax recorders even though the Betamax recorders embodied a superior technology. B) A consumer who won a lottery for a Super Bowl ticket refuses to sell it for $3,000 even though he would not have paid $3,000 for a ticket if he had not won the lottery. C) Costly celebrity endorsements lead many consumers to buy a product even though it is more expensive or less effective than a product that is not endorsed by a celebrity. D) While playing the ultimate game, an allocator decides to share $20 equally with a recipient rather than keep the $20 for herself.
An externality is a situation in which
A) private costs diverge from social costs. B) internal costs diverge from private costs. C) there are no social costs. D) the cost borne by the consumer is greater than the monetary price.
Which of the following represents one or more of the key goals and objectives of the Fed?
a. Promotion of low-priced foreign imports b. Restoration of scarce and depletable natural resource stocks c. Promotion of U.S. corporate interests overseas d. High levels of employment, economic growth, and stability in prices