The difference between nominal GDP and real GDP is that:
A. real GDP accounts for foreign production in a country and nominal GDP does not.
B. nominal GDP adjusts the value of goods for changes in the price level and real GDP does not.
C. real GDP adjusts the value of goods for changes in the price level and nominal GDP does not.
D. nominal GDP accounts for foreign production in a country and real GDP does not.
Answer: C
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If there is an excess supply of money
A) individuals sell bonds, causing the interest rate to rise. B) individuals sell bonds, causing the interest rate to fall. C) individuals buy bonds, causing interest rates to fall. D) individuals buy bonds, causing interest rates to rise.
Which of the following is not a characteristic of a competitive market?
a. Buyers and sellers are price takers. b. Each firm sells a virtually identical product. c. Entry is limited. d. Each firm chooses an output level that maximizes profits.
As output increases, average fixed costs
A. increase. B. initially decrease and then increase. C. remain constant. D. decrease.
Refer to the graphs, in which the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve, respectively. All numbers are in billions of dollars. The interest rate and the level of investment spending in the economy are at point B on the investment demand curve. To achieve the long-run goal of a noninflationary full-employment output Qf in the economy, the Fed should:
A. Decrease the interest rate from 10 to 8 percent
B. Decrease the interest rate from 8 to 6 percent
C. Decrease the interest rate from 6 to 4 percent
D. Increase investment spending from $30 to $60 billion