The Ability of Macroeconomists to Predict the Future Course of Economic

question 1

Multiple Choice

The ability of macroeconomists to predict the future course of economic events:

• A) is no better than the meteorologist's ability to predict the next month's weather.
• B) is much better than the meteorologist's ability to predict the next month's weather.
• C) has gotten worse over time.
• D) is less precise than it was in the 1920s.

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Definitions:

Inventories

The stock of goods or materials that a company holds for the ultimate goal of resale or production.

Investment

The purchase of new plants, new equipment, new buildings, and new residences, plus net additions to inventories.

Nominal GDP

The total market value of all goods and services produced in a country in a given period, measured using current prices without adjusting for inflation.

Current-Year Prices

Prices of goods and services measured during the same year they are produced, not adjusted for inflation; also referred to as "nominal prices."