Suppose an economy has some inflation. Then, after a base year, the value of real GDP will
A) be less than nominal GDP.
B) not be different from nominal GDP.
C) be greater than nominal GDP.
D) will be approximately half the value of nominal GDP.
C
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Proponents of the new classical macroeconomics do not believe which of the following?
A) Wages and prices will adjust rapidly in the economy. B) Workers and firms use information contained in Fed policy to form inflation expectations. C) The economy will normally be at its potential level. D) Expansionary monetary policy can be an effective policy tool.
At the end of the future period, in the real intertemporal model with investment
A) the firm's capital becomes useless and is thrown away. B) the firm's capital is used to produce more capital for the distant future. C) the firm can convert capital one-for-one into consumption goods. D) the firm's capital is converted into labor.
Where marginal cost is less than average cost,
a. opportunity cost must have been excluded from the calculation of marginal cost. b. marginal cost must be falling. c. marginal cost must be rising. d. marginal cost may be rising, falling, or constant.
The rate of full employment is usually considered to be:
(a) 100%. (b) 98%. (c) 97%. (d) 96%.