If the GDP deflator is greater than 100, then
A. nominal GDP equals real GDP.
B. nominal GDP is greater than real GDP.
C. prices decreased by more than half between the current and the base years.
D. nominal GDP is lower than real GDP.
Answer: B
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The definition of efficiency implies that production is carried out on the production possibilities frontier.
Answer the following statement true (T) or false (F)
Refer to Table 7-6. If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many swords will Morocco consume?
A) 60 B) 75 C) 135 D) 200
The law of increasing opportunity cost explains why the shape of the production possibilities curve is:
A. a straight line parallel to the horizontal axis. B. bowed inward (convex) to the origin of the graph. C. a straight line from one axis to the other. D. bowed out (concave) from the origin of the graph.
When the economy is producing at full capacity, the aggregate supply curve becomes
A. horizontal. B. upward sloping. C. downward sloping. D. vertical.