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real vs. nominal

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TWO QUESTIONS:

1. under a fixed exchange rate system, expansionary monetary policy depletes foreign reserves central bank. IS-LM diagram

2. ASSUME LAST YEAR'S REAL GDP WAS 7,000, THIS YEAR NOMINAL GDP IS 8,820, AND THE GDP DEFLATOR FOR THIS YEAR IS 120. WHAT WAS THE GROWTH RATE OF REAL GDP?

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Solution Summary

GDP Growth Rate is determined.

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1. When the central bank follows an expansionary monetary policy it shifts the LM curve to the right pushing down interest rates. Lower interest rates imply that the currency is ...

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