If both nominal and real Gross Domestic Product (GDP) are increasing when the money supply is constant, than we can conclude that
A. interest rate has fallen.
B. interest rate has increased.
C. velocity has decreased.
D. velocity has increased.
Answer: D
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If aggregate expenditure in an economy equals 3,000 + 0.75Y and full employment real GDP equals 12,000, then this economy has
A. no autonomous expenditure. B. a recessionary gap. C. an inflationary gap. D. no output gap.
The terms of trade refer to:
A) rules and regulations that govern trade between nations. B) product of the opportunity cost of producing the same good in two trading nations. C) exchange rate of goods for goods. D) amount of money that has to be given up to import an additional quantity of a good.
When the rate of appreciation of the nominal exchange rate equals the foreign inflation rate minus the domestic inflation rate, we say there is
A) relative purchasing power parity. B) purchasing power parity. C) a Phillips curve. D) an aggregate supply shock.
When economic profits are zero for a firm in a perfectly competitive market, it means that:
A. average total costs are zero. B. price is equal to minimum average total cost. C. average variable costs are minimized. D. MR is equal to AVC.