The GDP deflator is a measure of the overall change in prices in an economy:
A. based on goods and services valued at constant prices.
B. using the ratio of real to nominal GDP.
C. based on price-changes determined when output is held constant.
D. using the ratio of nominal to real GDP.
Answer: D
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In 1992, the base year, you were earning $500/week. Your wages rose to $900 in 2001, the current year, when the Consumer Price Index stood at 150. What statement can you make about what happened to your real wages over this period?
A. They rose. B. They fell. C. They remained the same. D. There is not enough information to determine whether they rose, fell, or remained the same.
If interest rates rise, what will happen to the nation's exchange rate?
What will be an ideal response?
Other things equal, increasing home prices tend to
A. force homeowners to spend less than they earn. B. increase the likelihood that homeowners will default on their mortgages. C. allow homeowners to spend more than they earn. D. leave homeowners' ability to spend unaffected.
If a firm’s fixed cost (overhead) increases, what happens to its profit-maximizing price and output?
What will be an ideal response?