Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2016 and in 2017 if the Federal Reserve does not use monetary policy. If the Fed uses monetary policy successfully to keep real GDP at its potential level in 2017, which of the following will be higher than if the Fed had taken no action?
A) Real GDP and then inflation rate
B) real GDP and the unemployment rate
C) real GDP and potential GDP
D) potential GDP and the inflation rate
A
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Money's use in non-barter transactions relates to its role as a
A) store of value. B) medium of exchange. C) unit of accounting. D) standard of deferred payment.
Suppose an increase in price decreases quantity demanded from 210 to 190. Using the mid-point formula, the percentage change in quantity demanded is:
A. 2 = 200 percent. B. 0.2 = 20 percent. C. 0.2 = 20 percent. D. 0.1 = 10 percent
What price would an individual be willing to pay today for a stock that is expected to sell for $100 two years from now and which pays an annual dividend that is $6.00? Assume the individual has a discount rate of 8% (0.08).
What will be an ideal response?
Suppose that an economy produces 300 units of output, employing the 50 units of input, and the price of the input is $9 per unit. The level of productivity and the per-unit cost of production are, respectively:
A. 1.50 and $6.00 B. 6 and $1.50 C. 5 and $6.00 D. 5 and $1.50