If the economy is at long run equilibrium then
A) real GDP equals potential GDP.
B) nominal GDP equals potential GDP.
C) real GDP cannot be equal to potential GDP.
D) real GDP can be greater than, less than, or equal to potential GDP.
A
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Facing stiff competition, Hendrix College, a small liberal arts institution in Conway, Ark
, decided two years ago to bolster its academic offerings, promising students at least three hands-on experiences outside the classroom, including research, internships and service projects. Although it raised tuition and fees by 29 percent, enrollment in the freshman class rose by 37 percent. Source: Jonathan D. Glater and Alan Finder, "In New Twist on Tuition Game, Popularity Rises With the Price," New York Times, December 12, 2006 Based on the information above, the demand for Hendrix College education is A) relatively elastic. B) unit elastic. C) perfectly elastic. D) More information is needed to answer the question.
In Monetarist theory, the demand to hold money is:
a. The same as the demand to borrow real loanable funds. b. Upward sloping because as the real risk-free interest rate rises, people want to hold more money. c. Rather unstable because it changes greatly with movements in the real risk-free interest rate. d. Neutral, in the sense that it is independent from all macroeconomic variables. e. Rather stable and does not change greatly with movements in the real risk-free interest rate.