GNP and GDP are important economic variables, because of their close association to:
a. Economic well-being and the exchange rate.
b. Real interest rates and the nominal exchange rate.
c. Nominal and real interest rates.
d. Nominal interest rates and real exchange rates.
e. Economic well-being and unemployment.
Question 2
Suppose a nation's saving, gross private domestic investment, government spending, and taxes remained unchanged from Year 1 to Year 2, but tariffs and quotas on imported goods and services rose by 20 from Year 1 to Year 2 . The net effect on the balance on goods and services would be:
a. It would have no effect on the balance on goods and services.
b. It would make the balance on goods and services more positive.
c. It would make the balance on goods and services more negative.
d. There is no way to tell what effect it would have on the balance on goods and services.
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