Answer the following statements true (T) or false (F)
1. Business cycles refer to short term fluctuations in prices.
2. Real GDP can change due to changes in the price level.
3. If nominal GDP is rising faster than real GDP, then inflation must be occurring.
4. Real GDP is calculated using current prices of outputs.
5. Inflation refers to an increase in the overall level of prices.
1. false
2. false
3. TRUE
4. FALSE
5. TRUE
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Setting a price support in the market for sugar beets above equilibrium price ________ the quantity produced and ________ the quantity bought by consumers
A) decreases; decreases B) increases; decreases C) decreases; increases D) increases; increases E) does not change; increases
How can performance-based incentives help companies facing moral hazard?
What will be an ideal response?
Workers and firms are currently expecting the price level to increase from 110 to 114. The Federal Reserve then announces that it will be reducing the growth rate of the money supply
If the Fed's announcement is credible, and firms and workers have rational expectations, describe how the expectations of firms and workers will be affected and how the change in expectations will affect the unemployment rate.
If the price of gasoline decreases, what will be the impact in the market for public transportation?
A) The quantity of public transportation demanded increases. B) The quantity of public transportation demanded decreases. C) The demand curve for public transportation shifts to the left. D) The demand curve for public transportation shifts to the right.