During periods when the inflation rate fluctuates widely, _____
a. the nominal interest rate and the real interest rate are identical
b. all money prices rise at the same rate, causing relative prices to increase
c. suppliers link the selling prices of their goods to the overall inflation rate
d. uncertainty about changes in relative prices causes a decrease in economic efficiency
e. all money prices increase at the same rate, leaving relative prices constant
d
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The Great Moderation describes the period
A) of relatively steady growth in real GDP between 1991 and 2008. B) of very slow growth in real GDP after 1990. C) between 2000 and 2008 when potential GDP did not increase. D) between 1990 and 2005 when real GDP grew significantly more slowly than did potential GDP. E) of relatively steady growth in real GDP after the year 2000.
Investment decreases by $300 billion, government expenditure is unchanged, and exports increase by $500 billion. As a result, autonomous expenditure ________, the total expenditure ________, and equilibrium real GDP ________
A) increases by $800 billion; increases; increases by more than $800 billion B) increases by $200 billion; increases; increases by more than $200 billion C) decreases by $300 billion; decreases; decreases by more than $300 billion D) is unchanged; is unchanged; is unchanged E) increases by $500 billion; is unchanged; increases by more than $500 billion
Given the quantity theory of money demand, a doubling of the money supply will lead to a
A) halving of the velocity of money. B) doubling of the level of real output. C) doubling of the level of nominal output. D) rise in the level of interest rates.
Making a pound of wool takes 5 hours in Scotland and 2 hours in Iceland. Making a cord of firewood takes 5 hours in Scotland and 8 hours in Iceland. Suppose that labor is only productive resource needed in these industries, and is fully employed in both nations. Under these conditions, if Iceland produces 4 extra pounds of wool, but Scotland produces 2 fewer pounds of wool, there is a net
A. gain of 2 cords of firewood in the world. B. gain of 1 cord of firewood in the world. C. loss of 2 cords of firewood in the world. D. loss of 1 cord of firewood in the world.