If prices have increased since the base period, then
A) real GDP is larger than nominal GDP.
B) real GDP can no longer be compared to nominal GDP.
C) real GDP is equal to nominal GDP.
D) real GDP is smaller than nominal GDP.
E) there is no way to adjust nominal GDP so that it equals real GDP.
Answer: D) real GDP is smaller than nominal GDP.
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Periods of price deflation, such as the Great Depression, are characterized by
A) low nominal rates but high real rates of interest. B) low nominal and real interest rates. C) real rates of interest lower than the nominal rate of interest. D) high nominal and real rates of interest.
__________ argue that any exogenous decrease in investment spending would be countered automatically by either increased consumption or interest-sensitive investment spending
A) Monetarists B) Keynesians C) Classical economists D) None of the above.
Symmetric information
A) is the same as perfect information. B) holds under the assumption of rational expectations. C) is true only in efficient markets. D) means that savers and borrowers have the same information.
An increase in taxes on labor earnings, everything else equal
a. shifts the labor supply curve to the left and increases the real wage. b. shifts the labor supply curve to the right and increases the real wage. c. shifts the labor supply curve to the right and reduces the real wage. d. shifts the labor supply curve to the left and reduces the real wage.