Other things equal, if there is an increase in nominal GDP:
A. the demand for money will decrease.
B. the interest rate will rise.
C. bond prices will rise.
D. consumption spending will fall.
B. the interest rate will rise.
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
Which of the following types of firms should expect a higher rate of return?
a. an auto dealership b. a biotech pharmaceutical firm c. a manufacturer of screws and bolts d. a paper products firm e. all of the above
The percentage of U.S. families below the poverty line is approximately
a. 5 percent b. 10 percent c. 25 percent d. 45 percent e. 65 percent
Since externalities tend to keep markets from reaching a socially optimal equilibrium, government action
a. is always needed because private solutions can never be attained. b. is needed when private solutions fail to arise. c. will be needed only to correct for positive externalities. d. will be needed only to correct for negative externalities.