Gross domestic product measured in terms of the prices of a fixed, or base, year is
A. current GDP.
B. nominal GDP.
C. base GDP.
D. real GDP.
Answer: D
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Which of the following statements is true of a flexible exchange rate system?
A) Market forces tend to undervalue a currency over time. B) Market forces tend to overvalue a currency over time. C) Market forces do not affect exchange rates between different currencies. D) Market forces tend to push the exchange rate of a currency to market clearing levels over time.
If the nominal interest rate is 10% and expected inflation is 5%, the real expected interest rate is
A) 15%. B) -5%. C) 5%. D) 10%.
If you were the Chairman of the Fed and faced inflation, you would most likely
a. increase commercial bank reserves by raising the discount rate b. increase commercial bank reserves by buying government securities c. decrease commercial bank reserves by lowering the discount rate d. decrease commercial bank reserves by selling government securities e. decrease commercial bank reserves by lowering the legal reserve requirement
Which of the following reasons do economists use to explain why people are overweight?
a. People undervalue the utility to be received in the future. b. People overvalue the utility from current choices. c. People's preferences are not consistent over time. d. All of the above explain why people are overweight.