Which of the following is a limitation of using arithmetic ...

[kshipps]

Which of the following is a limitation of using arithmetic averages to calculate growth rates?
 
  A) Arithmetic averages do not capture the exponential nature of growth and thus are not apt for long-run prediction.
  B) Arithmetic averages cannot be used in case of negative growth.
  C) Arithmetic averages are difficult to calculate.
  D) The calculation of growth using arithmetic averages requires more data than other methods.

Question 2

If the federal funds rate is set by the Taylor rule and the output gap increases by 5 percentage points, everything else remaining unchanged, the federal funds rate should ________.
 
  A) decrease by 2.5 percentage points B) decrease by 5 percentage points
  C) increase by 5 percentage point D) increase by 2.5 percentage points

[Amiracle]

Answer to Question 1

A

Answer to Question 2

D