Real and Nominal Values
These are the way prices are listed on store shelves.
What are…nominal values.
This occurs when there is inflation in the economy…
What is… an increase in the price level
If there is an expected inflation rate of 7% but an actual inflation rate of 5%, who benefits: the lenders or the buyers?
What are… the buyers
The current account contains these three things.
What is… sales and purchases of goods and services, factor income, and net international transfer payments.
This word describes the practice of limiting trade to protect domestic industries.
What is protectionism?
The difference between ”real” and “nominal values” is mainly discussed when talking about these three things…
What are… income, wages, and interest rates.
A hypothetical consumption bundle is the definition of this…
What is… a market basket.
These are the costs which arise from frequent monetary transactions during periods of hyperinflation…
What are…shoe leather costs.
Current account + Financial account = this.
What is … 0
If the U.S. places a tariff on goods from India, what will happen in both foreign exchange market graphs?
The supply of dollars will decrease and the demand for rupees will decrease.
The best measure for comparing a country’s aggregate output over time is this…
What is… real GDP.
Savings are … by inflation.
What is… discouraged.
If there is unexpected inflation, this group does not benefit.
What are…lenders.
An American billionaire buys $100,000 worth of stocks from a Chinese company. This is an example of what is included in the ….
What is… financial account.
Expansionary fiscal policy results in this…
What is… increased demand for foreign currency
Real GDP is adjusted for changes in this…
What is…price level
What is…real incomes will fall.
If a loan has a nominal interest rate of 6%, and the inflation rate is 1%, the real interest rate is this percent…
What is… 5%.
If the financial account is in surplus, the current account is in…
What is … Deficit
The United States has this kind of exchange rate regime…
If nominal GDP equals $6,000 and the GDP deflator equals 200, then real GDP equals this number…
What is… $3,000
If the cost of a market basket of goods increases from $100 in year 1 to $120 in year 2, this number equals the consumer price index in year 2 under the assumption that year 1 is the base year…
What is… 120.
This is an example of what might happen from unexpected deflation…
What is… widespread bankruptcy and a banking crisis.
If there are more capital outflows, the …. account is in deficit.
What is … Financial
Devaluation of a currency is used to achieve this goal.
What is… eliminate a shortage in the foreign exchange market.