Which of the following is true of nominal GDP?
a. It acts as an indicator of the general price level in the economy.
b. It measures the real level of output in the economy.
c. It measures national output based on the current year's prices.
d. It tends to rise by a smaller amount than real GDP when the general price level increases.
e. It measures changes in the output of intermediate goods and services.
c
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Bank reserves will increase over time when:
a. the Fed sells government securities on the open market. b. the Treasury sells government securities on the open market. c. depositors take funds out of their checkable deposit accounts. d. the Fed buys government securities on the open market. e. the Fed lowers the discount rate.
E&S Cooling Co installs air conditioning systems in new houses for homebuilders, and replacement systems for homeowners. Sales of which systems are included in this year's GDP?
a. Sales of replacement systems b. Sales of both systems c. Sales of systems in new houses d. Neither system would be included, because they are always intermediate goods.