L. Multiple Choice Questions leach question counts 2 polnts, 24 points altogethe
ID: 1144480 • Letter: L
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L. Multiple Choice Questions leach question counts 2 polnts, 24 points altogether 1. The GOP deflator shows d the average change in the nominal GP 2. The money multipler shows that by howmuch, change in bi monetary base, moey supply upply monetary base wtuai deficit refers to bi e 4) the govermment's deficit which would preval it GoP equaled ns potential level. on of interest rates aj the b) the manipulation of the money supply d) the manipulation of inflation 5. The Taylor Rule determines a relationship between the interest rate set by the central bank a) the deviation of inflation from its target level. b) the deviation of output from its potential level c) both a) and b). d) neither a) or b). 6. The costs of reducing inflation (measured by temporary unemployment) is lower if a) the announced monetary or fiscal policy is credible. b) the announced monetary or fiscal policy is not credible. dl the announced monetary or fiscal policy is a self-fulfilling prophecy d) the announced monetary or fiscal policy is only temporary. 7.By labor force we mean the a) whole population. b) the population of working age. d the employed people. d) people with a job or registered as looking for one.Explanation / Answer
1. Option B. Average change in the price level.
Explanation: Inflation deflator = (Nominal GDP/Real GDP) * 100. Therefore, GDP deflator shows how much the nominal GDP is differing from the real GDP. Nominal GDP differs from the real GDP because of change in the average price level across years. Therefore, GDP deflator reflects changes in price level.
2. Option D. Money supply, Monetary base.
Explanation: Money Supply = Money multiplier * Monetary Base. Therefore, money multiplier shows how much money supply change because of a given change in the monetary base.
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