Inflation Associated with Potential GDP Persists at Higher Levels for Longer

question 61

Multiple Choice

Inflation associated with potential GDP persists at higher levels for longer periods of time

• A) the more heavily people weight recent inflation in forming their inflationary expectations.
• B) the less sensitive inflation is to the gap between actual and potential GDP.
• C) the more sensitive inflation is to the gap between actual and potential GDP.
• D) a and b.
• E) all of the above.

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Definitions:

Opportunity Costs

The value of the next best alternative that is foregone when a decision is made.

Underemployment

A situation in which workers are employed below their skill level or work fewer hours than they would prefer.

DVCs

Digital Video Cameras, electronic devices used to capture video in a digital format.