If the percent change in nominal GDP is 5 percent and inflation is 3 percent, the percent change in real GDP is:
A. 8 percent.
B. 15 percent.
C. 2 percent.
D. 0 percent.
Answer: C
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What would be the consequence of a 10 percent decrease in the price of a good for which price elasticity of demand is 5?
a. A 50 percent decrease in the quantity demanded b. A 5 percent increase in the quantity demanded c. A 50 percent increase in the quantity demanded d. A decrease in the quantity demanded by 0.2 units e. An increase in the quantity demanded by 0.2 units
Strategic currency stabilization:
A. involves frequent exchange rate intervention. B. is successful only if the government does not attempt to affect market expectations. C. can be successful only if governments possess large amounts of official reserves. D. involves carefully-timed exchange rate intervention.
Price wars among firms
A. Tend to reduce short-run price stickiness because firms know they can lower their own prices without rival firms lowering their prices B. Occur when one firm lowers its price and rival firms react by lowering their prices C. Occur when firms use advertising to take customers away from rival firms D. Have no impact on the degree of short-run price stickiness
A hike in the federal funds rate results in ________ in the real interest rate which leads to a ________ in investment
A) an increase; a decrease B) a decrease; a decrease C) a decrease; an increase D) a decrease; no change E) an increase; an increase