Suppose there is an oil supply shock to the U.S. economy due to an embargo by major oil producing nations. According to the real business cycle theory, the supply shock will, other things being equal
A. cause real Gross Domestic Product (GDP) to decline both in the short run and in the long run.
B. push the economy into an expansionary phase of the business cycle.
C. cause economy-wide deflation.
D. push real Gross Domestic Product (GDP) upward in the short run but downward in the long run.
Answer: A
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The value of total output and total income in the simple circular flow model
A) include only intermediate goods. B) are equal to each other. C) are measures of the economy's level of savings. D) are related in the sense that national income is less than national product.
In Figure 10-5 above, suppose that the level of government expenditures increases. This causes a movement of the steady-state point such as from points
A) A to B. B) D to B. C) D to C. D) A to C. E) A to D.
Which of the following topics is not a part of a typical scenario plan?
a. Aging populations. b. Immigration and emigration. c. Informatics. d. Cash flows. e. All the above are a part of a typical scenario plan.
The steps involved in calculating the consumer price index and the inflation rate, in order, are as follows:
a. Choose a base year, update the basket, find the prices, estimate the basket's cost, compute the index, and compute the inflation rate. b. Choose a base year, fix the basket, find the prices, compute the inflation rate, compute the basket's cost, and compute the index. c. Fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index, and compute the inflation rate. d. Fix the basket, find the prices, compute the inflation rate, compute the basket's cost, and choose a base year and compute the index.