Suppose the European Union has a Nominal GDP of 20 trillion Euros, and their GDP deflator is 125. What is the European Union’s Real GDP?
A. 25 trillion Euros
B. 16 trillion Euros
C. 0.16 trillion Euros
Ans: B. 16 trillion Euros
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According to the classical model, investment
A) is a function of the nominal GDP. B) is inversely related to the interest rate. C) is a function of real GDP. D) is influenced by the money illusion at low income levels.
If the government borrows to purchase goods and services, today's consumption of government goods and services will be paid for by
A) today's taxpayers and tomorrow's taxpayers in even shares. B) today's taxpayers. C) future taxpayers. D) government employees.
If the Fed injects reserves into the banking system and they are held as excess reserves, then the money supply
A) increases by only the initial increase in reserves. B) increases by only one-half the initial increase in reserves. C) increases by a multiple of the initial increase in reserves. D) does not change.
The market demand is the:
A. horizontal sum of all individual demand curves in a market. B. horizontal sum of all individual prices in a market. C. sum of all individual demand curves and supply curves in a market D. vertical sum of all individual demand curves.