Chapter Questions
An increase in _______ GDP guarantees that more goods and services are being produced by an economy.a. Nominal.b. Real.
True or False. The term economic investment includes purchasing stocks, bonds, and real estate.
If an economy has sticky prices and demand unexpectedly increases, you would expect the economy’s real GDPto:a. Increase.b. Decrease.c. Remain the same.
If an economy has fully flexible prices and demand unexpectedly increases, you would expect that the economy’s real GDP would tend to:a. Increase.b. Decrease.c. Remain the same.
If the demand for a firm’s output unexpectedly decreases, you would expect that its inventory would:a. Increase.b. Decrease.c. Remain the same.d. Increase or remain the same, depending on whether prices are sticky.
True or False. Because price stickiness only matters in the short run, economists are comfortable using just one macroeconomic model for all situations.