If real GDP increased by 2% and nominal GDP increased by 4%, then output:

The overriding factor in analyzing long-run changes in the exchange rate is:

a. the exchange rate in the period t- 1. b. how a permanent change in the supply of money is transmitted to prices and interest rates. c. the reaction of traders as they conduct arbitrage and speculation. d. the notion that there is no long run, only a series of short-run measurements.

What is the rationale behind a cap-and-trade emission allowance system?

A) It creates a market for externalities. B) It disciplines polluting firms by specifying the maximum amount of emissions allowed and gives them permits to pollute up to their allowance. C) It provides firms with the incentive to consider less costly alternatives to pollution reduction by making firms pay for the right to pollute beyond their specified allowance. D) It raises revenue for the government through the sale of permits.