Question #7
Reading: Reading 6 Economic Growth
PDF File: Reading 6 Economic Growth.pdf
Page: 4
Status: Unattempted
Correct Answer: A
Question
Relative to the growth rate in potential GDP, the rate of appreciation in the aggregate stock market:
Answer Choices:
A. can be lower in the short-term but is equal in the long run
B. is the same in the short and long run
C. can be higher in the long run but is the same in the short-term
Explanation
In the short-term, appreciation in the aggregate stock market can be lower (or higher) than
the growth rate in potential GDP. However, in the long-run, aggregate stock market
appreciation should be equal to growth rate in potential GDP.