Effectively managing aggregate demand in order to stabilize nominal GDP requires
A) policy makers to know the size of the gap between current demand and demand at equilibrium.
B) only that policy makers know what level of aggregate demand is necessary for full employment.
C) successful economic forecasting.
D) that nominal GDP be the same as real GDP.
E) very little information about the economy because the market system is an efficient generator of high-quality information.
C
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Is GDP a good measure of our economic well being? Explain.
Refer to Figure 2.1. If you are producing 600 tons of agricultural products per year, what is the maximum amount of manufactured products you can produce per year?
A) 300 tons B) 500 tons C) 600 tons D) 700 tons
Refer to Scenario 3 . Compare and discuss the two elasticity estimates computed above
Without doing any more calculations what would you expect to happen to the value of the elasticity estimates as price continues to fall? Assume a linear demand curve.
The actual exchange rate of the real, Brazil's currency, is 2.40 real per U.S. dollar. According to the PPP estimation, the exchange rate should be 1.20 real per U.S. dollar. This implies that the real is:
A. undervalued by 50 percent. B. overvalued by 20 percent. C. undervalued by 20 percent. D. overvalued by 50 percent.