Problem 1
An increase in _______ GDP guarantees that more goods and services are being produced by an economy. a. Nominal. b. Real.
Problem 3
If an economy has sticky prices and demand unexpectedly increases, you would expect the economy’s real GDP to: a. Increase. b. Decrease. c. Remain the same.
Problem 4
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.
Problem 5
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.
Problem 6
True or False. Because price stickiness only matters in the short run, economists are comfortable using just one macroeconomic model for all situations.
