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06- Based on the GDP deflator, inflation is positive (relative
to the base year) if
Select one:
a. nominal GDP is larger than real GDP
b. can't be detrmined from the given information
c. nominal GDP equals real GDP
d. nominal GDP is less than real GDP
e. All of the above
05- Based on price setting behavior, we know that an increase in
the markup will cause
Select one:
a. no change in the real wage.
b. a reduction in the real wage.
c. a downward shift in the price setting curve
d. an increase in the real wage.
e. an upward shift of the WS curve.
04- Assets minus liabilities equals
Select one:
a. none of the above
b. Bank deposits
c. Bank loans
d. Bank bonds
e. Bank capital
03- A Fed sale of securities will most likely have which of the
following effects?
Select one:
a. an upward shift in the LM curve
b. a leftward shift in the IS curve
c. a downward shift in the LM curve
d. a rightward shift in the IS curve
e. an upward shift in the IS and a downward shift in the LM.
Answer-1. Correct option is 'a'
Based on the GDP deflator, inflation is positive (relative to the base year) if nominal GDP is larger than real GDP. Nominal GDP is increasing means the positive economic growth because : 1) Production has increased, 2) Prices at which goods and services are sold in the market place have increased. Inflation is generally positive when a country's nominal GDP is generally higher than its real GDP.
Answer-2. Correct option is 'b'
Based on price setting behavior, we know that an increase in the markup will cause a reduction in the real wage. Mark up refers to the cost, margins to the price. An increase in markup means increase in cost or decrease of productivity, results decrease the real wage and lead to an increase in the natural rate of unemployment.
Answer-3. Correct option is 'e'
Assets minus liabilities equals Bank Capital. Bank Capital represents the value invested in the bank by its owner and investors. It is calculated as the sum of the bank's assets minus the sum of bank's liabilities.
Answer-4 Correct option is 'a'
A Fed sale of securities will an upward shift in the LM curve. If the Fed sale securities, it decrease the money supply by removing cash from the economy in exchange for bonds
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