A hotel stay in Montreal by a New York state resident would be part of our count

Question

A hotel stay in Montreal by a New York state resident would be part of our country's exports. Nominal GDP is a better measure of national output than real GDP. Real GDP is computed using inflation-adjusted prices. The longest expansion in U.S. history occurred in the 1960s. The Great Stagflation took place between 1929 and 1933. A point outside the production possibilities curve would represent a point where real GDP is greater than potential GDP. Potential GDP is the level of GDP that can be produced when the when resources are fully utilized but not overutilized. Cyclical unemployment falls during recessions. The unemployment rate equals the total number of unemployed workers divided by the total working-age population. Borrowers gain and lenders lose when actual inflation is higher than expected inflation. Inflation in the late 1970s was higher than inflation is now. The MPC tells us how much additional consumption spending will be induced by each additional dollar of disposable income. Wealth is the value of what people earn by producing output. An increase in the price level shifts the total spending line up. A permanent increase in taxes shifts the total spending line up. An increase in income in the rest of the world increases net exports. An increase in exports by 100 billion dollars will cause equilibrium real GDP to increase by more than 100 billion dollars. Government spending should decrease when there is a recessionary gap. The amount of reserves in the banking system decreases when the Fed sells bonds. The Fed can lower interest rates by buying bonds on the open market. The interest rate on overnight loans between banks is the Federal funds rate. The Federal Open Market Committee decides what the Federal government's fiscal policy is. If the exchange rate between the U. S. dollar and the Japanese yen changes from 100 yen per dollar to 80 yen per dollar, then the U.S. dollar has appreciated in value. A lower interest rate in the U.S. leads to a fall in the value of the dollar, given no change in interest rates in the rest of the world. A reason why the supply curve for dollars is upward sloping is that an increase in the value of the dollar makes imports cheaper.

Explanation / Answer

1. B, false.

If the home country is Montreal, then a New York state resident's stay in Montreal would be included in the Montreal's GDP but that is not a part of its exports. Exports is the trading of goods and serives outside the boundary of the home country. A New York resident is neither selling anything in Montreal nor the Montreal hotel is selling its services abroad (its within the domestic territory of Montreal).

2. B, False.

Real GDP is a better meaure as it takes into account the inflation or the price level prevailing in the economy which gives a better picture of the situation of an economy.

3. A, True.

Real GDP is the nominal GDP adjusted for inflation prices.

4. B, False.

In the 1960 there was a recessionary phase in the U.S economy, which ended in 1961. And after that, during the end of 1961 the U.S economy faced the longest exapnsionary phase.

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