The forward exchange rate:
A. is the same as the spot rate.
B. is the rate at which foreign exchange dealers are willing to commit today to buying or selling a currency in the future.
C. is a synonymous term for the nominal exchange rate.
D. is always above the spot rate since it carries greater risk.
Answer: B
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In the mid-1980s, velocity "fell off the rails," growing much slower than its historical trend of 3.4 percent. Had the Fed assumed a constant growth rate of 3
4 percent and maintained a constant growth rate of money supply rather than increasing the growth rate of the money supply as it did, A) nominal GDP would have grown more slowly as would real GDP. B) nominal and real GDP would have grown more rapidly. C) nominal GDP would have grown more rapidly faster and GDP would have grown more slowly. D) real GDP would have grown more rapidly faster and nominal GDP would have grown more slowly.
Figure 32-1
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In Figure 32-1, there are four levels of income. G is government expenditures and TT is taxes less transfers. At which level of income does the official budget produce a surplus?
A. Y4 B. Y3 C. Y2 D. Y1
Eliza wants to borrow $100 from Sandy. Sandy wants to make 4% real return on his money, so they both agree on a 4% interest rate paid next year. Eliza and Sandy did not anticipate any inflation, yet the actual inflation turned out to be -5% next year. In this case
A. Eliza will pay an 9% real interest rate. B. Eliza will pay a 4% nominal interest rate. C. Sandy is better off. D. all of the above.
By far the largest real government budget deficits measured as a percentage of natural real GDP occurred during
A) World War I. B) the Great Depression. C) World War II. D) the late 1960s. E) the late 1980s and early 1990s.