Every unit of good x that is produced in the United States is exported to other countries. An increase in the price of good x shows up
a. in the consumer price index and in the GDP deflator.
b. in the consumer price index, but not in the GDP deflator.
c. in the GDP deflator, but not in the consumer price index.
d. in neither the consumer price index nor in the GDP deflator.
c
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Full-employment output is also called
A) potential output. B) national output. C) natural output. D) target output.
A Federal Reserve repurchase agreement involves
A) an agreement by a bank to repay a discount loan on a specific day. B) an agreement by a dealer to buy back securities she has sold to the Fed. C) an agreement between the Fed and the Treasury for the Fed to purchase a specified amount of Treasury securities. D) an agreement by a commercial bank to make a loan to another bank in the federal funds market.
Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and real GDP rises. b. The real risk-free interest rate falls, and real GDP stays the same. c. The real risk-free interest rate rises, and real GDP remains the same. d. There is not enough information to determine what happens to these two macroeconomic variables. e. The real risk-free interest rate falls, and real GDP falls.
If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos rises?
a. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would increase, and the equilibrium quantity would decrease. d. The equilibrium price would decrease, and the equilibrium quantity would increase.