Economic growth is best measured by the increase in
A. nominal GDP.
B. potential output.
C. disposable personal income in current dollars.
D. disposable personal income in real dollars.
Answer: B. potential output.
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Which of the following are primary functions of a central bank?
I. act as a regulator of banks II. issue government bonds III. set monetary policy IV. regulate dividend payments by corporations A) I, II, III, and IV B) I, II, and III C) I and III D) I and II
An exchange rate that is set by official government policy is called a ________ exchange rate.
A. nominal B. flexible C. fixed D. real
Rational expectations theory implies that the:
A. aggregate demand curve is vertical. B. long-run aggregate supply curve is vertical. C. long-run aggregate supply curve is horizontal. D. long-run aggregate supply curve is quite flat.
Assume the demand for coffee increases and the supply of coffee decreases. Which of the following outcomes is certain to occur?
A. The equilibrium quantity of coffee will fall. B. The equilibrium price of coffee will fall. C. The equilibrium price of coffee will rise. D. The equilibrium quantity of coffee will rise.