1.Most economists believe that the source of European high unemployment in the past two decades is
A.labor market institutions
B.tight monetary policy
C.tight fiscal policy.
D.financial crisis
2.Use the following information to answer this question. If nominal GDP rises from $100 trillion to $120 trillion, while the GDP deflator rises from 2.0 to 2.2, the percent- age change in real GDP is approximately equal to
A. -10%
B. 10%
C. 20%
D. 9.1%
E. 0%
3.During the late 1990s, Japan experienced reductions in the GDP deflator. Given this information, we know with certainty that
A.real GDP fell during these periods
B.real GDP did not change during these periods
C.the overall price level in Japan decreased during these periods
D.both real GDP and the overall price level decreased during these periods
4.The money demand curve will shift to the left when which of the following occurs?
A.a reduction in the interest rate
B.an increase in the interest rate
C.an open market sale of bonds by the central bank
D.an increase in income
E.none of the above
5.Suppose a one-year discount bond offers to pay $1000 in one year and currently sells for $950. Given this informa- tion, we know that the interest rate on the bond is
A. 5.3%
B. 9.5%
C. 10%
D. 90%
E. 110%
Sample Solution