Keynesian vs Monetarist

2 questions on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Exam level

A Japan-headquartered automaker operates an assembly plant inside the United States. In which measure does that plant's output count for the United States?

A. U.S. GDP, since the plant is located inside U.S. borders B. U.S. GNP, since the plant's output is sold in the U.S. C. Japan's GDP, since the parent company is Japanese D. Neither GDP nor GNP counts foreign-owned output

How sure are you?

Sure Fairly sure Guessing

Correct: A. GDP is a location-based measure: output produced within a country's own borders, by anyone, foreign-owned included.

B. GNP is ownership-based, tracking a country's own citizens and companies wherever they operate; a foreign-owned plant does not count toward U.S. GNP simply because its output is sold in the U.S.

C. GDP is a location-based measure specific to where the plant physically sits, not where its parent company is headquartered.

D. GDP explicitly counts output produced within a country's borders by anyone, foreign-owned included.

Unit: SIE outline 1.3.3

Question 2Exam level

What is an exchange rate?

A. The price of one currency in terms of another B. A country's total balance of payments for one year C. The federal funds rate target set by a central bank D. A tariff rate applied to imported goods

How sure are you?

Sure Fairly sure Guessing

Correct: A. An exchange rate is the price of one currency in terms of another.

B. The balance of payments records total transactions, a different figure from a currency's price against another currency.

C. The federal funds rate is a domestic monetary-policy tool, not a currency price.

D. A tariff rate is a trade-policy charge, not a currency price.

Unit: SIE outline 1.3.3

Now answer