According to the assumptions of the quantity theory of money, if the money supply decreases by 7 percent, then
A: nominal and real GDP would fall by 7 percent.
B: nominal GDP would fall by 7 percent; real GDP would be unchanged.
C: nominal GDP would be unchanged; real GDP would fall by 7 percent.
D: neither nominal GDP nor real GDP would change.
A: nominal and real GDP would fall by 7 percent.
B: nominal GDP would fall by 7 percent; real GDP would be unchanged.
C: nominal GDP would be unchanged; real GDP would fall by 7 percent.
D: neither nominal GDP nor real GDP would change.
举一反三
- Real and nominal variables are highly intertwined, and changes in the money supply change real GDP in the short run.
- Suppose an economy produces only cheese and fish. In 2008, 20 units of cheese are sold at $5 each and 8 units of fish are sold at $50 each. In 2007, the base year, the price of cheese was $10 per unit and the price of fish was $75 per unit. For 2008, ( )? nominal GDP is $800, real GDP is $500, and the GDP deflator is 160.|nominal GDP is $500, real GDP is $800, and the GDP deflator is 160.|nominal GDP is $500, real GDP is $800, and the GDP deflator is 62.5.|nominal GDP is $800, real GDP is $500, and the GDP deflator is 62.5.
- When economists talk about growth in the economy, they measure that growth as the A: absolute change in nominal GDP from one period to another. B: percentage change in nominal GDP from one period to another. C: absolute change in real GDP from one period to another. D: percentage change in real GDP from one period to another.
- If a country had deflation, A: the nominal interest rate would be greater than the real interest rate. B: the real interest rate would be greater than the nominal interest rate. C: the real interest rate would equal the nominal interest rate. D: None of the above is necessarily correct.
- If money is neutral, then changes in the quantity of money A: do not affect real output. B: affect both nominal and real output. C: do not affect nominal output. D: affect neither nominal nor real output.