Answer the question on the basis of the following information: Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per unit prices of these three goods are A = $2, B = $3, and C = $1. Refer to the
information. Nominal GDP in the current year is:
A. $110.
B. $115.
C. $45.
D. $90.
B. $115.
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The quantity theory of money predicts that in the ________, a 10 percent increase in the quantity of money leads to a 10 percent increase in ________
A) long run; real GDP B) short run; velocity C) long run; velocity D) long run; price level
According to the Keynesian model with fixed money wages, real wages should be
a. negatively correlated with changes in output. b. positively correlated with changes in unemployment. c. negative correlated with changes in the price level. d. fixed as well. e. both a and c.
If the Fed wants to maintain current interest rates, it would be buying government bonds in the open market when
A) the demand for money increases. B) investment demand decreases. C) the discount rate increases. D) the demand for money decreases.
Ignoring the issue of whether the CPI overstates the cost of living generally, the fact that the poverty line is adjusted using the overall CPI to adjust for overall inflation means that if the costs of necessities rises
A. faster than the overall CPI, the poverty line is understated. B. faster than the overall CPI, the poverty line is overstated. C. slower than the overall CPI, the poverty rate is overstated. D. slower than the overall CPI, the poverty rate is understated.