When calculating real GDP, the reference base year
A) allows us to account for changes in GNP compared to GDP.
B) always reduces the value of GDP compared to GNP.
C) allows us to calculate the value of the goods and services in terms of prices of that base year.
D) usually increases the value of GNP compared to GDP.
E) allows us to increase the value of goods and services.
C
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If a firm is in a perfectly competitive world but decides to charge a higher price than its competitors,
A) the firm's profits will be zero or negative, and the firm will fail in the long run. B) the firm's profits will be zero or negative, and the firm will fail in the short run. C) the firm's profits will be positive or negative, and the firm will fail in the short run. D) the firm's profits will be positive or negative, and the firm will fail in the long run.
An inflationary gap exists when AD and SRAS
A) fail to intersect. B) intersect to the right of Natural Real GDP. C) intersect to the left of Natural Real GDP. D) both have a positive slope.
If financial turmoil overseas reduces U.S. net exports, then those in favor of "lean against the wind policies" would advocate
a. decreasing the money supply and cutting taxes. b. decreasing the money supply and raising taxes. c. increasing the money supply and cutting taxes. d. increasing the money supply and raising taxes.
When the Fed sells government bonds in the open market, interest rates will rise.
a. true b. false