If the Fed announces that it will reduce the growth rate of the money supply to 3% next year but people do not believe it, the Fed is said to
A. be an inflation nutter.
B. lack credibility.
C. engage in commitment.
D. engage in destabilizing policy.
Answer: B
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Suppose real GDP for a country is $13 trillion in 2015, $14 trillion in 2016, $15 trillion in 2017, and $16 trillion in 2018. Over this time period, the real GDP growth rate is
A) increasing. B) decreasing. C) constant. D) negative.
Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real GDP and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. There is not enough information to determine what happens to these two macroeconomic variables. b. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). c. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). d. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). e. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. Real GDP falls and the current international transactions balance becomes more negative (or less positive). b. Real GDP rises and the current international transactions balance becomes more negative (or less positive). c. Real GDP and the current international transactions balance remain the same. d. Real GDP rises and the current international transactions balance remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
The only component of GDP which can have a negative value is
A. consumption expenditures. B. net exports. C. government spending. D. private investment expenditures.