According to the real business cycle theory, an increase in energy prices will
A. increase real Gross Domestic Product (GDP) but not change the price level.
B. decrease both real Gross Domestic Product (GDP) and the price level.
C. decrease real Gross Domestic Product (GDP) but increase the price level.
D. increase both real Gross Domestic Product (GDP) and the price level.
Answer: C
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Refer to the figure above. The increase in output due to the same one-unit increase in capital is greatest at point ________
A) A B) B C) C D) D
GDP that has been adjusted for changes in the price level is called: a. nominal GDP
b. real GDP. c. personal income. d. net GDP.
One of the major reasons why nations trade is that
a. nations choose to trade for largely unknown reasons. b. resources are not equally distributed across the planet. c. nations wish to exert cultural influence abroad. d. nations wish to copy others, and need imports to study.
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model?
a. Real GDP rises, and current international transactions become more negative (or less positive). b. Real GDP and current international transactions remain the same. c. There is not enough information to determine what happens to these two macroeconomic variables. d. Real GDP falls, and current international transactions become more negative (or less positive). e. Real GDP rises, and current international transactions remain the same.