Refer to the above figure. If the aggregate demand curve shifts beyond AD5, which of the following would we NOT expect?
A. no increase in real Gross Domestic Product (GDP)
B. strong and rapid increases in the price level
C. strong demand-pull inflation
D. increases in real net domestic product
Answer: D
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The case of New Zealand, described in the text, concludes that a country's current account deficits are not sustainable if a country's
A) prospects for long term economic growth are above its global deficit growth. B) ability to sustain current account deficits is questionable. C) unproductive industrial sectors and its prospects for long run growth. D) labor productivity is below that of most other countries. E) exchange rate has fallen relative to other currencies.
What is an advantage of using options instead of forward contracts when speculating on exchange rates?
What will be an ideal response?
In the classical model, real Gross Domestic Product (GDP) per year is
A. due to supply conditions plus the extent of government intervention in the economy. B. demand determined. C. supply determined. D. determined by supply and demand conditions together.
When loans are repaid at commercial banks:
A. Money is created B. Money is destroyed C. The assets of commercial banks increase D. The net worth of commercial banks increases