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1. If nominal GDP in 2016 equals to $4,500 and real GDP for the year is $4,000 (in 2009 dollars), The GDP deflator in 2016 is and the rate of inflation since 2009 is a. 112.5, 12.5 percent. b. 88.9,-11.1 percent 12.5, insufficient information for the calculation of the rate of inflation. 11.1, insufficient information for the calculation of the rate of inflation. c. d. 2. Actual GDP is run. a. above, above b. below; below c. below; above d. below; equal to e. above; equal to potential GDP during a recession and it is potential GDP in the long 3. Lydia agreed to lend some cash to her friend at an interest rate of 10%. the lending. When the loan expires, Lydia found out her real return actually was 4%. Based on the information above, which one of the following is true? a. The actual rate of inflation is equal to the expected rate of inflation over the course of the She expects a real return of 6% from b. The actual rate of inflation is lower than expected rate of inflation over the course of the c. The actual rate of inflation is higher than expected rate of inflation over the course of the d. The rate of inflation is irrelevant in this case 4. The government offers research grants to institutions and individuals. This will aid the growth of a. potential GDP b. the working age population c. the price level d. the interest rate

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Answer #1

1. a 112.5 ;12.5 percent

2. a above ; above

3. d The rate of inflation is irrelevant in this case

4. b the working age population

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