Which of the following statements correctly highlights a difference between real GDP and nominal GDP?
A) Real GDP includes the value of goods and services produced by foreign firms, while nominal GDP does not.
B) Real GDP strips out the effect of changing prices on the value of goods and services produced, while nominal GDP does not.
C) Real GDP includes the value of goods and services produced by domestic firms in foreign countries, while nominal GDP does not.
D) Real GDP does not take into account the value of goods produced and also services provided, while nominal GDP takes these into account.
B
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Regarding open economies, economists tend to find evidence that
A) the more closed an economy is, the higher the rate of growth the economy will experience. B) trade tariffs tend to improve economic growth. C) free trade encourages a more rapid spread of technology, and hence increases economic growth. D) open economies tend to have access to smaller markets than do closed economies.
The amount of money a lender requires for the use of funds is called:
A. interest. B. principal. C. internal rate of return. D. present discounted value.
Exhibit 15-7 Foreign exchange market for U.S. dollars and British pounds
Exhibit 15-7 shows a situation in which:
A. both the dollar and the pound have depreciated. B. both the dollar and the pound have appreciated. C. the dollar has depreciated and the pound has appreciated. D. the dollar has appreciated and the pound has depreciated.
The aggregate demand curve shifts to the right if
a) the government decreased welfare programs b) the Fed decreased the reserve requirement c) the government raised taxes d) the demand for money increased e) none of the above shifts the aggregate demand curve to the right