Answer to Question #42605 in Macroeconomics for Rachel

Question

True or false:
1. When nominal GDP is increasing, while its real GDP is decreasing, the GDP deflator must be greater than 100?

2. For an open economy, domestic investment is always equal to national saving?

Answer 1

1. It's true, because in this case therewill be inflation and the level of inflation will be high enough. And if there
is an inflation, deflator is greater than 100.

2.It's false, because in the open economy there is also an investment abroad, so domestic investment is not always equal to national saving.