When the economy is at an above full-employment equilibrium, ________
A) nominal GDP exceeds real GDP
B) an inflationary gap exists
C) a recessionary gap exists
D) real GDP is less than potential GDP
B
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Refer to the Article Summary. If the Federal Reserve's announcements about upcoming monetary policy decisions are not seen as credible, as Senator Pat Toomey alludes to regarding the Fed's changing projections as to when they would increase interest
rates, which of the following would you expect to see? A) Inflation expectations will accurately reflect actual inflation. B) Expansionary monetary policy will result in lower rates of inflation. C) The Federal Reserve will have more control over the inflation rate. D) Firms and workers will be unable to accurately forecast changes in the rate of inflation.
While the debate between output and the environment is subjective, all countries should aim to be where on the production possibility frontier?
a. Inside the PPF with allocative efficiency b. Outside the PPF with allocative efficiency c. Inside the PPF with productive efficiency d. On the PPF with productive efficiency
According to the rule of 70, a country will double its real GDP per capita in 10 years if it:
A. has a population growth rate of 7 percent. B. experiences a 7 percent growth rate in per-capita GDP. C. has inflation of 7 percent. D. None of these is true.
A citizen in a developing country with a currency policy of convertibility on the current account could engage in all of the following transactions except:
A. sell foreign currency resulting from the exports of manufactured t-shirts. B. sell foreign currency resulting from the sale of a U.S. treasury bond. C. purchase foreign currency in order to import a BMW. D. purchase foreign currency in order to purchase a U.S. treasury bond.