If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices.
B. lower level of output and prices.
C. higher level of output and prices.
D. lower level of output at higher prices.
Answer: A
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Slowdonia's current growth rate of real GDP per person is 1 percent a year. Approximately how long will it take to double real GDP per person?
A) 10 years B) 35 years C) 70 years D) 100 years
On the Fed's balance sheet, assets include
A) reserves of depository institutions and mortgage-backed securities. B) U.S. government securities and mortgage-backed securities. C) currency and reserves of depository institutions. D) currency and mortgage-backed securities.
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Suppose 1 U.S. dollar exchanges for 1 euro, and the price of a car imported from Germany is 50,000 euros. If next week the euro depreciates to 0.90 U.S. dollars to 1 euro, what will happen to the dollar price of the car for American consumers?
A. It will fall from $50,000 to $45,000. B. It will fall from $55,556 to $50,000. C. It will rise from $50,000 to $55,556. D. It will rise from $45,000 to $50,000.