37. The classical economists were not concerned with the short-run performance of the economy because they believed that a. the economy on its own can quickly correct itself of short-run economic problems b. short-run problems were not signicant c. in the short-run the government can solve all economic problems quickly d. in the short run business investment will quickly increase 38. Which one of the following is consistent with the circular ow of income? a. goods and services ow in one direction 7 b. payments and income flow in one direction c. only (a) is correct d. both (a) and (b) are correct 39}. All of the following are incomes earned in the factor markets except a. rents b. wages c. dividends d. profits 40. Which ofthe following measures only the output of goods and services in the economy? a. potential GDP b. real GDP c. nominal GDP d. the GDP deflator 41. in the classical model, an increase in aggregate demand will a. result in an increase in both output and the [price level b. have no effect on the price level and on aggregate demand c. result in an increase in output only @ d. result in an increase in the price level only 42. Which of the following is not a function of the Fed? a. lending funds to private firms b. regulating the money supply c. holding reserves of depository institutions d. supervising member banks 43. Year Nominal GDP GDP Deflator Real GDP (billions of dollars) (billions of dollars) 2000 $3405.0 87.2 2001 95.0 $4146.2 2002 $4038.7 94.4 2003 96.9 $4405.2 2004 $4539.9 $4539.9 2005 $4900.4 103.9 2006 113.1 $4839.6 Refer to the table above, the GDP Deflator for 2005 ( as a. 100 b. 103.9 c. 113.1 d. 87.2 44. Refer to the table for question 43 above, the nominal GDP for 2006 was a. $5222.2 b. $5967.1 c. $ 5250.7 d. $481816 45. Refer to the table for question 43 above, the real GDP for 2005 was a. $ 4839.4 b. $4716.5 c. $4923.6 70