Homework Answers
Correct Answer:
C
Real deficits are real variable and it is not affected by the change in inflation rate, because inflation is nominal variable. So, nominal value of deficits can be affected, but real value of deficits will remain same.
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Inflation is 20 percent. Debt is $2 trillion. The nominal deficit is $300 billion. If the...
Inflation is 12 percent. Debt is $2 trillion. The nominal deficit is $300 billion. Is there...
Inflation is 12 percent. Debt is $2 trillion. The nominal deficit is $300 billion. Is there a real deficit or a real surplus and what is the amount? A. There is a real deficit of $540 billion B. There is a real surplus of $540 billion. ° C. There is a real surplus of $60 billion O D. There is a real deficit of $60 billion.
The nominal deficit is $150 billion, inflation is 4%, and the total debt is $8 trillion....
The nominal deficit is $150 billion, inflation is 4%, and the total debt is $8 trillion. Does this economy have a real deficit or a real surplus? Show your calculations.
Suppose that this year's money supply is $500 billion, nominal GDP is $10 trillion and real...
Suppose that this year's money supply is $500 billion, nominal GDP is $10 trillion and real GDP is $5 trillion. a. What is the price level? b. What is the velocity of money? (Please calculate your answers in billions, i.e. leave off the zeros (0) if necessary.) c. Suppose that velocity is constant and the economy's output of goods and services rises by five percent each year. What will happen to nominal GDP and the price level next year if the Fed...
Suppose that money supply is $4 trillion, nominal GDP is $20 trillion, and real GDP is...
Suppose that money supply is $4 trillion, nominal GDP is $20 trillion, and real GDP is $16 trillion. a. What is the price level? What is the velocity of money? Suppose that velocity is constant and the economy’s output of goods and services rises by 3 percent each year. b. What will happen to nominal GDP and the price level next year if the Fed increases the money supply by 5 percent? c. What money supply should the Fed set...
Suppose that this years money supply is $500 billion, nominal GDP is $6 trillion, and real...
Suppose that this years money supply is $500 billion, nominal GDP is $6 trillion, and real GDP is $2 trillion. a. What is the price level? What is the velocity of money? b. Suppose that velocity is constant and the economy's output of goods and services rises by 3% each year. What will happen to nominal GDP and the price level next year if the Fed keeps the money supply constant? c. What money supply should the Fed set next...
If expected inflation is constant, then when the nominal interest rate falls, the real interest rate...
If expected inflation is constant, then when the nominal interest rate falls, the real interest rate O A. falls by more than the change in the nominal interest rate. falls by the change in the nominal interest rate. Oc rises by the change in the nominal interest rate. OD.rises by more than the change in the nominal interest rate. QUESTION 15 According to liquidity preference theory, if there were a surplus of money, then O A. the interest rate would...
Use the following information to answer this question. If nominal GDP rises from $100 trillion to...
Use the following information to answer this question. If nominal GDP rises from $100 trillion to $120 trillion, while the GDP deflator rises from 2.0 to 2.2, the percentage change in real GDP is approximately equal to: Select one: o a. -10% o b. 10% oc. 20% d. 9.1% e. 0% OOO
Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household...
Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending Initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy's multiplier is 4 a. If household wealth falls by 4 percent because of declining house values, and the real interest rate falls by 3 percentage points, in what direction and by how much will the aggregate demand curve...
1. Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in...
1. Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the econo- my's multiplier is 4. If household wealth falls by 5 percent because of declining house values, and the real interest rate falls by 2 percentage points, in what direction and by how much will the aggregate demand...
10. Suppose that consumer spending initially rises by 7 billion for every 1 percent rise in...
10. Suppose that consumer spending initially rises by 7 billion for every 1 percent rise in household wealth and that investment spending initially rises (or falls) by 20 billion for every percentage point fall (rise) in the real interest rate. Also, assume the economy's multiplier is 5. a. If household wealth rises by 5% and the real interest rate increases by 1%, by how much would aggregate demand initially shift at each price level? By how much and in which...
Inflation is 12 percent. Debt is $2 trillion. The nominal deficit is $300 billion. Is there a real deficit or a real surplus and what is the amount? A. There is a real deficit of $540 billion B. There is a real surplus of $540 billion. ° C. There is a real surplus of $60 billion O D. There is a real deficit of $60 billion.
If expected inflation is constant, then when the nominal interest rate falls, the real interest rate O A. falls by more than the change in the nominal interest rate. falls by the change in the nominal interest rate. Oc rises by the change in the nominal interest rate. OD.rises by more than the change in the nominal interest rate. QUESTION 15 According to liquidity preference theory, if there were a surplus of money, then O A. the interest rate would...
Use the following information to answer this question. If nominal GDP rises from $100 trillion to $120 trillion, while the GDP deflator rises from 2.0 to 2.2, the percentage change in real GDP is approximately equal to: Select one: o a. -10% o b. 10% oc. 20% d. 9.1% e. 0% OOO
Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending Initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy's multiplier is 4 a. If household wealth falls by 4 percent because of declining house values, and the real interest rate falls by 3 percentage points, in what direction and by how much will the aggregate demand curve...
1. Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the econo- my's multiplier is 4. If household wealth falls by 5 percent because of declining house values, and the real interest rate falls by 2 percentage points, in what direction and by how much will the aggregate demand...
10. Suppose that consumer spending initially rises by 7 billion for every 1 percent rise in household wealth and that investment spending initially rises (or falls) by 20 billion for every percentage point fall (rise) in the real interest rate. Also, assume the economy's multiplier is 5. a. If household wealth rises by 5% and the real interest rate increases by 1%, by how much would aggregate demand initially shift at each price level? By how much and in which...
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