The Table Below Shows Data for Japan Assuming the Rate of Velocity Change Is Constant, Real GDP

question 53

Multiple Choice

The table below shows data for Japan.
$$\begin{array} { | l | l | l | } \hline & 2008 & 2009 \\\hline \text { M1 growth rate } & 0.7 & 0.9 \\\hline \text { Inflation rate } & 0.4 & - 0.3 \\\hline\end{array}$$
Assuming the rate of velocity change is constant, real GDP

• A) grew by -1.2 percent in 2009.
• B) grew by 1.1 percent in 2008.
• C) grew by 0.3 percent in 2008.
• D) grew by 0.9 percent in 2009.

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Definitions:

STRIPS

Separate Trading of Registered Interest and Principal Securities, a type of U.S. government security that allows the separate trading of interest and principal components.

Treasury Notes

Intermediate-term U.S. government debt security with a maturity of 1 to 10 years and pays interest every six months.

Maturity at Issue

The predetermined date when a financial instrument, such as a bond, will come due and the principal is to be paid back to investors.

Default Risk

The potential risk that an issuer of a bond or other debt security will be unable to make principal and interest payments when due.