QUESTION: 1297

Which of the following statements is false?

real GDP excludes earnings by domestic citizens abroad
the change in real GDP plus the inflation rate equals growth in nominal GDP
changes in nominal GDP include the impact of changes in the money supply
real GDP measures strictly changes in national output
change in nominal GDP is always greater than the change in real GDP

Answer(s): E

Explanation:

The change in nominal GDP usually exceeds that of real GDP because inflation is usually positive.
However, in a flat or declining price environment real GDP would exceed nominal GDP change.

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QUESTION: 1298

Which of the following is not an example of an inflationary change in prices?

A car dealer decides to charge more for a new model year of cars because of new features II. A university decides to increase tuition to pay for a new athletic field III. An electronics retailer charges more for new DVD players than for outdated VCRs
I, II
I, III
I only
II, III
II only
None of these answers is correct

Answer(s): F

Explanation:

Prices for goods can increase for reasons other than inflation. Inflationary price increases are the result of too many dollars chasing too few goods. These examples are price increases that are the result of improvements in the good being purchased.

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QUESTION: 1299

During periods of rapid growth in output

there has been no consistent relationship between output growth and employment or unemployment.
both employment and unemployment generally rise.
employment generally decreases and unemployment increases.
employment generally increases, while unemployment decreases.
both employment and unemployment generally fall.

Answer(s): D

Explanation:

During a business expansion, business sales tend to rise, GDP grows rapidly and the rate of unemployment declines.

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QUESTION: 1300

Which of the following would be considered an automatic stabilizer?

Federal Reserve policy
II. government payrolls
III. public works projects
I, III
none of these answers is correct
II, III
I, II, III
I, II
III only

Answer(s): B

Explanation:

An automatic stabilizer is anything that would decrease the government budget surplus during slow economies and increase the surplus during strong economic periods. Federal Reserve policy is not automatic, its directed.
Government payrolls do not inherently increase or decrease during economic periods. Similarly, public works projects would not automatically increase due to an economic slowdown.

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Free CFA-Level-I Exam Braindumps (page: 325)

QUESTION: 1297

Explanation:

QUESTION: 1298

Explanation:

QUESTION: 1299

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QUESTION: 1300

Explanation: