Which of the following could cause nominal GDP to decrease, but real GDP to increase?
A) The price level rises and the quantity of final goods and services produced rises.
B) The price level falls and the quantity of final goods and services produced falls.
C) The price level rises and the quantity of final goods and services produced falls.
D) The price level falls and the quantity of final goods and services produced rises.
Answer: D) The price level falls and the quantity of final goods and services produced rises.
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If exchange rates are floating, the Fed increasing its target inflation rate will cause the dollar to ________ relative to other currencies and cause net capital outflows to ________
A) appreciate; increase B) appreciate; decrease C) depreciate; increase D) depreciate; decrease
Why do consumers benefit from pay-as-you-go social security?
A) It keeps inflation in check as money is redistributed. B) It is a better way than taxes to finance the government. C) It forces people to save more than they would otherwise. D) With sufficiently high population growth, many young contribute to the benefits of the old.
Special districts are often set up among small governments to deal with _____
a. externalities internalized within a governments borders b. externalities that spill across borders c. free-riding problems concerning public goods d. unhealthy competition among local governments
A horizontal merger is one in which the merging firms:
a. are about the same size. b. produce the same good in the same industry. c. will control greater than 50 percent of the market. d. have never directly competed in the past. e. will pay twice as much in taxes.