If nominal GDP is less than real GDP, then the GDP deflator will be greater than 100
Indicate whether the statement is true or false
FALSE
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The Eye of Horus incense company has $10 million in cash which it has accumulated from retained earnings. It was planning to use the money to build a new factory. Recently, the rate of interest has increased. The increase in the rate of interest should
a. not influence the decision to build the factory because The Eye of Horus doesn't have to borrow any money. b. not influence the decision to build the factory because its stockholders are expecting a new factory. c. make it more likely that The Eye of Horus will build the factory because a higher interest rate will make the factory more valuable. d. make it less likely that The Eye of Horus will build the factory because the opportunity cost of the $10 million is now higher.
The most important reason for why some people have higher income than others is ______.
Fill in the blank(s) with the appropriate word(s).
A chain-weighted index:
A. is used to understate the rate of inflation. B. uses neighboring years' data to calculate changes in nominal GDP. C. calculates changes in prices by using an average of base years from neighboring years to obtain a more accurate measure of real GDP growth. D. is a useful tool for determining which fence to purchase.
A decrease in demand and an increase in supply will:
A. Affect price in an indeterminate way and decrease the equilibrium quantity B. Increase price and affect the equilibrium quantity in an indeterminate way C. Decrease price and affect the equilibrium quantity in an indeterminate way D. Increase price and increase the equilibrium quantity