The base year for the calculation of real GDP for the hypothetical economy in Figure 5.2 is closest to
A. 1960.
B. 2000.
C. 1990.
D. 1980.
Answer: D
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Multiperiod forecasting with multiple predictors
A) is the same as the iterated AR forecast method. B) can use the iterated VAR forecast method. C) will yield superior results when using the multiperiod regression forecast h periods into the future based on p lags of each Yt , rather than the iterated VAR forecast method. D) will always yield superior results using the iterated VAR since it takes all equations into account.
Which of the following factors does not help explain incomplete specialization by countries that trade in accordance with comparative advantage?
a. There may be high transportation costs for perishable products or human services. b. The economies of trading partners may be of vastly different sizes. c. Opportunity costs of production may not be constant, but may vary with the volume of production. d. Governments may impose all kinds of barriers to free international trade, such as tariffs and quotas. e. The cost of making trade deals may have become extremely low because of the existence of the World Trade Organization.
Economists have found that the price elasticity of demand for water is higher in the summer than in the winter. Why is this likely to be so?
A. Summer is longer than winter, and price elasticity is higher over longer time horizons. B. People take more vacations in the summer and so use less water at home. C. Winter water use tends to be for necessities such as cleaning and cooking, and summer water use tends to be for both necessities and non-necessities such as gardening and recreation. D. Winter is longer than summer, and price elasticity is lower over longer time horizons.
The greater is the risk of non-repayment of a loan, the
A) higher is the expected rate of interest. B) longer is the expected time to repay the loan. C) lower is the handling charges for the loan. D) lower is the expected rate of interest.