Which of the following circumstances would cause current GDP to overstate economic well-being in comparison to 60 years ago?
A. An increase in the total output per person
B. An increase in military expenditures
C. An increase in welfare payments
D. The trend toward a shorter work week
Answer: B. An increase in military expenditures
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Fannie Mae and Freddie Mac both
A) sell bonds to investors and use the funds to purchase mortgages. B) help regulate the banking system. C) directly lend funds to people seeking mortgages. D) reduce access to funds for mortgages by purchasing existing mortgages.
Which of the following is the best definition of potential output?
a. The output that could be produced if the economy were above full employment b. The output that could be produced if the economy had no unemployment c. The output that could be produced if the economy had no frictional unemployment d. The output that could be produced if the economy were at full employment e. The output that could be produced if the economy had no structural unemployment