Refer to the data. If year 2 is chosen as the base year, real GDP for year 1 is:
Assume an economy that is producing only one product. Output and price data for a three- year period are as follows. Answer the question on the basis of these data.
A. $25.
B. $100.
C. $20.
D. $80.
D. $80.
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A fall in the price of a good increases the real income or purchasing power of consumers so that they are able to buy more of the product. This statement best describes:
A) the income effect. B) a complementary good. C) the substitution effect. D) an inferior good.
Suppose the economy currently has some underutilized resources. The Fed engages in expansionary monetary policy. The impact of expansionary monetary policy will be to
A) increase aggregate demand, increase prices and increase real GDP. B) increase short-run aggregate supply, decrease in prices and decrease in real GDP. C) increase short-run aggregate supply, decrease prices and increase real GDP. D) increase aggregate demand, increase prices and decrease real GDP.