Question
There are two questions I am struggling with. For question 21, the correct answer in the answer key is A. But I don't understand why.
There are two questions I am struggling with. For question 21, the correct answer in the answer key is A. But I don't understand why. I thought it should increase by 3%, answer choice E. I put the growth rates in the GDP deflator formula, then I simply substituted 6% into nominal gdp and 2% for real gdp, and got a gdp deflator of 3. Why is this wrong?
For question 16, the correct answer from the answer key is E. I don't understand why E is the right answer. To me, it seems like the money supply will decrease by exactly half because the money multiplier was halved. Please why E is the correct answe.
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