The Fed's inability to instantaneously observe changes in inflation and economic growth result in
A) information lag.
B) impact lag.
C) policy lag.
D) jet lag.
A
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A manufacturer produces 1 million televisions in the first quarter of the year. It sells 900,000 of them before the end of the first quarter, and holds the others in its warehouse. How will the 100,000 unsold televisions be treated in the GDP statistics?
a. Since the televisions eventually will be bought by consumers, they will be included as consumption in the first quarter. b. Since the televisions were not purchased in the first quarter, they will be counted as an increase in second-quarter GDP. c. The televisions will be counted as a change in inventory in the first quarter and so will be included in first-quarter GDP. d. The televisions will be counted as a change in inventory in the first quarter, and when sold in the second quarter will raise second-quarter GDP.
Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.