The Nongovernment Share of GDP

question 30

Multiple Choice

The nongovernment share of GDP

• A)is, for any real interest rate, the sum of the share of net exports, investment, and consumption expenditures.
• B)is, for any interest rate, equal to 1 minus the government spending share of GDP.
• C)is positively related to the real interest rate.
• D)is, for any interest rate, the sum of investment and consumption shares.
• E)is negatively related to the real interest rate.

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Definitions:

Exchange Rate

The rate at which one currency can be exchanged for another.

Relative Purchasing Power Parity

An economic theory that suggests the rates of inflation between two countries will affect the exchange rate between their two currencies.

Expected Inflation

An estimation of the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Real

Pertaining to tangible or actual assets, situations, or values, as opposed to hypothetical or projected ones.