The long-run nominal growth rate of the economy is a good measure of which of the following?
A)the inflation rate
B)the government deficit
C)the risk-free interest rate
D)the foreign trade surplus

Question

Quizplus · Accepted Answer

The long-run nominal growth rate of the economy reflects the sum of the real growth rate (real GDP growth) and the inflation rate. It influences the risk-free interest rate because higher nominal growth rates can lead to higher interest rates, as lenders demand higher returns in an expanding economy. It does not directly measure inflation, government deficit, or foreign trade surplus.

The Long-Run Nominal Growth Rate of the Economy Is a Good