If you have $5000 and the GDP deflator decreases from 100 to 80
A) the $5000 will buy 20 percent more of the goods and services produced by society.
B) the value of the $5000 remains constant.
C) the $5000 will buy 20 percent less of the goods and services produced by society.
D) the value of the $5000 decreases.
A
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At an interest rate of 5 percent, the present value of $1,000 to be received three years from today is
A) less than $875. B) between $875 and $925. C) between $925 and $975. D) more than $975.
Suppose you read in the paper that the Federal Reserve plans to expand the money supply. The Fed is most likely to do this by
A) printing more currency and distributing it. B) purchasing government bonds from the public. C) selling government bonds to the public. D) buying newly issued government bonds directly from the government itself.