In an economy with persistent inflation,
A. real GDP will grow faster than nominal GDP.
B. nominal GDP will grow faster than real GDP.
C. nominal and real GDP will grow at the same rate.
D. nominal and real GDP will both fall.
Answer: B
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Lizzie's budget line is shown in the figure above. If the price of a magazine rises, Lizzie's real income in terms of magazines books ________ and her real income in terms of cookies ________
A) increases; does not change B) decreases; does not change C) decreases; increases D) increases; decreases
In the Classical view, the money supply determines
A) interest rates. B) the saving rate. C) aggregate supply. D) the price level.
Those who favor programs aimed at reducing inequality argue that these programs:
A. help reduce poverty. B. provide a financial incentive to work harder. C. provide a financial incentive to invest in human capital. D. discourage firms from discriminating in their hiring.
Aggregate supply shocks cause the price level and real GDP to change in
A) the same direction and by the same amount. B) opposite directions with price changing by less than output. C) opposite directions but not necessarily by the same amount. D) the same direction with price changing by more than output. E) opposite directions but by the same amount.