Leading indicators:
a. Are near perfect predictors of the future. It is for this reason that they are relied on so heavily by governments, central banks, and the private sector.
b. Have a mixed track record for predicting business cycles and should therefore be used cautiously. Nevertheless, they still might provide some useful insights.
c. Are designed to be used in theoretical research only and therefore do not provide any value added when analyzed for business purposes.
d. Give information about an economy's performance in the past and should consequently not be used for business decisions.
.B
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An article in the Wall Street Journal noted the following: Instead of relying on a full-coach, round-trip unrestricted fare of about $2,000 between Cleveland and Los Angeles
Continental [Airlines] since June has offered a $716 unrestricted fare in that market .... Through October, the test resulted in about the same revenue that Continental thinks it would have collected with its higher fare. Source: Scott McCartney, "Airlines Try Cutting Business Fares, Find They Don't Lose Revenue," Wall Street Journal, November 22, 2002. What is the absolute value of the price elasticity of demand on this airline route? A) less than 1 B) approximately 1 C) greater than 1 D) 0
Where does the money for investment in physical capital come from? It largely comes from:
A. the savings of ordinary households. B. government subsidies. C. the reinvestment of funds from businesses. D. donation by foreign countries.
Intel microchips are an input in the production of a computer. When the demand for the computer declines:
a. the quantity demanded of Intel microchips increases. b. the quantity demanded of Intel microchips declines. c. the demand for Intel microchips increases. d. the demand for Intel microchips decreases. e. there is no change in the demand for the Intel microchips.
If the CPI was 180 at the end of 2007, and 216 at the end of 2008, the inflation rate in 2008 was
A) 216 percent. B) 36 percent. C) 18 percent. D) 20 percent. E) 16.67 percent.