The equation of exchange states that
A) saving equals investment.
B) gross domestic product equals the money supply multiplied by its velocity.
C) increases in money supply cause decreases in velocity.
D) increases in money supply cause increases in velocity.
Answer: B) gross domestic product equals the money supply multiplied by its velocity.
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Sammy has a drone that he values at $1,500. Frank values the same drone at $1,000. The government offers a subsidy of $800 to the buyers of drones, and Sammy and Frank agree on a price of $1,600
Producer surplus is ________ and consumer surplus is ________. A) $100; $200 B) $700; $600 C) $200; $1,400 D) $300; $100
Policymakers' attempts to use the Phillips curve to reduce the unemployment rate below the natural rate
A) will be successful since the Phillips curve shows the relationship between the inflation rate and the unemployment rate. B) will be successful if monetary policy is used. C) will be unsuccessful if monetary policy is used since monetary policy leads to higher prices. D) will be unsuccessful since workers' expectations adjust to attempts to reduce unemployment below the natural rate.
In long-run equilibrium, the perfectly competitive firm will
A) go out of business. B) produce to the point at which marginal cost is at its minimum. C) produce to the point at which marginal cost equals average total cost. D) produce on the upward sloping portion of its ATC curve.
If a 1 percent increase in price leads to a .7 percent increase in quantity supplied, the short-run supply curve is:
a. elastic. b. inelastic. c. unit elastic. d. perfectly inelastic.