40. If nominal GDP was $9,200 billion in Year 1 and $9,420 billion in Year 2 and prices increased from Year 1 to Year 2, thenA) real GDP was larger in Year 1 than in Year 2B) real GDP was larger in Year 2 than in Year 1C) the GDP-deflator must have been 122 D) the GDP-deflator must have been 102 E) we cannot determine the value of the GDP-deflator or real GDP in Year 2Ans: EDifficulty: Medium41. If nominal GDP is $8,820 billion and the GDP-deflator is 105, then real GDP isDifficulty: Medium42. If nominal GDP increased from $8,000 billion in the base year to $8,400 billion in the following year and real GDP stayed the same, which is true?Difficulty: Easy43. Assume that in 1962 nominal GDP was about $600 billion and real GDP was about $2,400 billion. The GDP-deflator for that year was
44. Assume nominal GDP was $8.0 trillion in Year 1 and $8.8 trillion in Year 2. If Year 1 is the base year, thenA) the GDP-deflator is 110B) prices increased on average by 10 percentC) real GDP has not changedD) none of the above can be trueE) both A) and B) are true, but only if C) is trueAns: EDifficulty: Easy45. The unemployment rate is most likely to decrease ifDifficulty: Easy46. Which of the following is TRUE?Difficulty: Easy47. The CPI, a price index used to measure inflation, is imperfect since
48. The consumer price index (CPI) and the producer price index (PPI) differ from each other sinceA) the PPI includes import goods but the CPI doesn'tB) the CPI usually rises sooner than the PPIC) the composition of their market baskets is differentD) the PPI does not measure price increases of a fixed market basketE) the CPI never overestimates inflation but the PPI often doesAns: CDifficulty: Easy49. If the nominal interest rate on a government bond is 6% and the rate of inflation is 4%, what is your real rate of return on this government bond? Difficulty: Easy50. Assume you can exchange 10 Mexican pesos for one U.S. dollar, but you need only 0.64 British pounds to get one U.S dollar. What does this imply?
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