If the real deficit is $100 billion, the inflation rate is 7.5 percent, and the nominal deficit is $400 billion, then total debt is:
A. $1 trillion.
B. $2 trillion.
C. $3 trillion.
D. $4 trillion.
Answer: D
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Compared to a single-price monopolist, a price-discriminating monopolist
A) produces more output. B) produces the same amount of output but charges a higher price. C) generates a larger deadweight loss. D) produces less output but charges a lower price.
Assume that the ratio of excess reserves to demand deposits is 0, and the ratio of currency to demand deposits is .2. If the reserve requirement on demand deposits is .3 and there is no reserve requirement on savings accounts, the M1 multiplier is
A) 5.5. B) 4. C) 2.5. D) 2.4.
If there are no restrictions on contracts, and if all parties in the economy accurately predict the rate of inflation over the next year, then
a. there will be no redistribution of purchasing power b. purchasing power will be redistributed from wage earners to business owners c. purchasing power will be redistributed from business owners to wage earners d. purchasing power will be redistributed from lenders to borrowers e. purchasing power will be redistributed from borrowers to lenders
Exhibit 9-1 GDP and consumption data GDP Consumption Aggregate Expenditures Unplanned inventory $0 $0.5 1 1.0 2 1.5 3 2.0 4 2.5 5 3.0 6 3.5 7 4.0 8 4.5 As shown in Exhibit 9-1, if investment is $0.5 trillion, government spending is $1 trillion, and net exports are ?$0.5 trillion, then equilibrium GDP is:
A. $2 trillion. B. $3 trillion. C. $4 trillion. D. $5 trillion.