Suppose you hold $50 to buy groceries weekly and then the price of groceries increases by 5 percent. To be able to buy the same amount of groceries, what must happen to your nominal money holdings?
A) They must increase by $5.
B) They can decrease by $5.
C) They must increase by $2.50.
D) They must increase, but the amount of the increase depends on income.
C
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The sum of the balances of the three accounts of the balance of payments (the current account, the capital and financial account, and the official settlements account) is
A) positive if there is a balance of trade surplus or negative if there is a balance of trade deficit. B) negative if there is a balance of trade surplus or positive if there is a balance of trade deficit. C) equal to zero. D) positive if there is a balance of trade surplus. E) negative if there is a balance of trade deficit.
Wobet is a small country that produces only steak and potatoes. Steaks have a price of $10 each and potatoes have a price of $1 each. Suppose that Wobet produces 10 steaks and 20 potatoes in 2010. Using ________, Wobet has GDP equal to ________
A) market value; 30 units B) a market basket; 30 units C) market value; $120 D) real value; $120 E) a price index; $120