Which of the following observations concerning GDP calculations is true?
A. Goods and services produced by governments are valued at market price.
B. Inventories are treated as if they are yet to be sold.
C. Goods produced but not sold during the year are counted in that year’s GDP.
D. Goods that firms add to their inventories do not count in the GDP.
Answer: C
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All of the following arguments are presented in favor of inflation targeting EXCEPT
A) it would draw attention to what the central bank can achieve in practice. B) it would provide an anchor for inflationary expectations. C) it would promote accountability by providing a yardstick by which policy can be measured. D) it would reduce the lags inherent in monetary policy.
When firms do not collude in a game-playing market environment, firms end up with low prices and high output levels
Indicate whether the statement is true or false