Real GDP is:
a) the nominal value of all goods and services produced in the economy.
b) the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation.
c) that aggregate output that is produced when the economy is operating at full employment.
d) always greater than nominal GDP.
b) the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation.
You might also like to view...
According to the table, when converted to U.S. dollars, Big Macs cost approximately ________ percent less in the United States than they do in Switzerland
A) 36 B) 42 C) 58 D) 126
What component of GDP is particularly volatile over the business cycle and can be targeted by tax cuts?
What are the consequences for a nation that keeps its exchange rate fixed, holds its own domestic interest rates below market to encourage domestic spending, and allows free foreign investment?
a. Foreign investors will not invest, so the only consequence will be a decline in the inflow of foreign investment. b. Domestic and foreign investors will invest in other nations, causing a sell-off of the domestic currency and, to maintain fixed rates, the central bank will have to buy its own currency, depleting its treasury reserves. c. There will be upward pressure on the rate of interest as more borrowing occurs, so the central bank will have to increase the stock of money. d. Interest rates in other nations will also fall as banks and other firms have to compete for international borrowers.
Starting from long-run equilibrium, the long-run impact of a war that raises government purchases, compared to the original equilibrium, is:
A. lower inflation and lower output. B. higher inflation and the same output. C. lower inflation and the same output. D. higher inflation and higher output.