The GDP gap measures the amount by which:
A. nominal GDP exceeds real GDP.
B. actual GDP exceeds potential GDP.
C. actual GDP exceeds national income.
D. potential GDP exceeds actual GDP.
Answer: D
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If you expect the inflation rate to be 4 percent next year and a one year bond has a yield to maturity of 7 percent, then the real interest rate on this bond is
A) -3 percent. B) -2 percent. C) 3 percent. D) 7 percent.
Changes in government purchases affect spending:
A. autonomously. B. indirectly. C. directly. D. only when there is an expansionary gap.
Refer to the graph below with three demand curves. A "decrease in demand" would be illustrated as a change from:
A. Point 1 to point 4
B. Point 1 to point 3
C. Line C to B
D. Line A to C
About 42 percent of M1 is composed of:
A. demand deposits. B. savings deposits. C. money market mutual funds. D. currency held by the public.