The measure of the money supply M1 includes all of the following except
A. Currency in circulation.
B. Balances in transactions accounts.
C. Travelers checks.
D. Balances in savings accounts.
Answer: D
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If the market price falls below the bottom of the firm's ATC curve:
A. the market price must be lower than the firm's AVC. B. Total revenue must be higher than total cost. C. there is no level of output at which the firm can make a profit. D. the firm is earning profits.
Even-handed enforcement of contracts fuels economic prosperity because it
a. permits individuals to invade or infringe on the property rights of others. b. increases transaction costs. c. increases market uncertainty and the probability of contract violations. d. promotes gains from trade by keeping transaction costs low.
The consumer price index (CPI):
A. measures the price of a fixed basket of goods and services relative to the price of that same basket in some base year. B. measures the price of a basket of goods and services that constantly changes as the composition of consumer spending changes. C. measures the amount of money that it takes to produce a fixed level of utility. D. is one of the many statistics in the National Income Accounts.
Which of the following best illustrates the circular flow model in action?
A. Bobbie goes to work and builds cars, and uses the income she receives to buy food at the grocery store. B. Evan buys a new couch; the owner of the furniture store uses some of the money from the sale to pay her supplier, and uses the rest to take her family out to dinner. C. Boeing experiences a surge in orders for new airplanes, prompting the company to hire more workers. D. All of these answers illustrate the workings of the circular flow model.