Most Economists Believe That in the Short Run

question 35

Multiple Choice

Most economists believe that in the short run

• A)real and nominal variables are determined independently and that money cannot move real GDP away from its long-run trend.
• B)real and nominal variables are determined independently but that money can temporarily move real GDP away from its long-run trend.
• C)real and nominal variables are highly intertwined but that money cannot move real GDP away from its long-run trend.
• D)real and nominal variables are highly intertwined and that money can temporarily move real GDP away from its long-run trend.

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Definitions:

Sinking Fund

A savings fund into which an organization sets aside money over time, intended to pay off a debt or bond at its maturity or to meet a future capital expense.

Subordinated

A ranking of debt that places this type of debt lower than other debts in terms of claims on assets or earnings, typically in the context of bankruptcy or liquidation.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back later, often with interest.

Equity

The value of an asset after deducting the total liabilities, or the ownership interest in a company divided among shareholders.