Friedman measured "permanent" income by assuming that people adjusted their consumption on the basis of
A) an "error learning" process with respect to their expected income.
B) an adaptive expectation formation of their expected income.
C) transitory income and the level of income expected over a period of years in the future.
D) All of the above.
D
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An economic recession produces
A) a decrease in cyclical unemployment. B) an increase in structural unemployment. C) a decrease in natural unemployment. D) an increase in cyclical unemployment. E) an increase in natural unemployment.
In 2011, U.S. GDP was
A) $15 trillion using the expenditure approach. B) $15 trillion using the income approach. C) $15 trillion using the expenditure approach and $14 trillion using the income approach. D) $16 trillion using the income approach and $14 trillion using the expenditure approach. E) both A and B are correct.