Real GDP is preferred to nominal GDP as a measure of economic performance because:
A. nominal GDP uses current prices and thus may over- or understate true changes in output.
B. nominal GDP only includes goods and excludes services.
C. nominal GDP is not adjusted for population changes.
D. real GDP accounts for changes in the quality of goods and services produced.
Answer: A
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The following include several reasons that government might give for using a tariff on imports? Which is not valid, in the sense that the effect described will not happen.
a. To raise government revenue. b. To help consumers. c. To raise incomes of producers. d. To respond to political pressures from import competing industries. e. To increase national welfare at the expense of foreigners.
Suppose Bill Gates deposits $20 million into his checking account at Wells Fargo Bank. If the required reserve ratio is 10 percent, what is the maximum change in money supply?
A) -$200 million B) -$180 million C) $2 million D) $180 million E) $200 million