Over a period of time, a nation's GDP increases by 3 percent at constant prices and by 5 percent at current prices. Other things being equal, the price level changed by about:
a. 2 percent
b. 3 percent
c. 8 percent
d. 5 percent
a. 2 percent
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By law, banks are required to
A) hold 100 percent of customer deposits as reserves. B) hold a fraction of demand deposits as reserves. C) hold a fraction of their reserves at the Federal Reserve bank. D) lend out no more than the amount of their required reserves.
According to this Application, if you earn a salary of $40,000 in the first year and all prices triple in the next 10 years, what will your nominal annual salary be in 10 years?
A) $20,000 B) $60,000 C) $120,000 D) $180,000
A firm is producing a joint product, Product A and Product B, with variable proportions. At its current production levels, the marginal benefit of producing Product A is $8 and the marginal cost is $12 and the marginal benefit of producing Product B is $8 and the marginal cost is $2. To maximize profits, the managers of the firm should produce ________ of Product A and ________ of Product B.
A) more; less B) more; more C) less; less D) less; more
Prolonged periods of monetary contraction, as was the case during the Great Depression, will likely result in
a. an increase in real output and employment. b. an increase in loanable funds and upward pressure on the rate of inflation. c. a decrease in output and downward pressure on prices. d. a decrease in unemployment and upward pressure on prices.