Which of the following is true about the equation of exchange??
a) The equation of exchange can be presented as: M + V = P + Q.
b) Velocity represents the average number of times that a dollar is used in purchasing final goods or services in a one-year period.
c) ?If M decreases, and V increases, then P must rise and/or Q must rise.
d) All of the above are true about the equation of exchange.
Ans: b) Velocity represents the average number of times that a dollar is used in purchasing final goods or services in a one-year period.
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Spending VCU4 on real-world goods and services causes the nation's:
a. Demand for real goods and services to rise and monetary base to remain the same. b. Demand for real goods and services to remain the same and M2 money supply to remain the same. c. Demand for real goods and services to remain the same and M2 money multiplier to fall. d. Demand for real goods and services to remain the same and M2 money supply to rise.
When a purely competitive firm is in long-run equilibrium, price is equal to:
A. marginal cost, but may be greater or less than average cost. B. marginal revenue but may be greater or less than both average and marginal cost. C. minimum average cost but may be greater or less than marginal cost. D. minimum average cost and also to marginal cost.
The quantity of TVs sold is 100 at the unit price $200. Suppose the price elasticity of demand for TVs by the initial value method is 2.0, and you would like to decrease the unit price for TVs to $150. Then the new quantity sold must be:
A. 125. B. 150. C. 200. D. 250.
Buddy has $2000 in a checking account and wants to buy a new MacBook for $1100. Buddy decides he needs the money in his account to pay his bills next month and so puts the $1100 on his credit card and pays it off gradually over the next several months. Buddy choosing to "save" his cash on hand for everyday expenses is:
A. rational, since Buddy can now pay all his bills with a small credit card payment each month. B. going to make Buddy wealthier in the long run. C. rational, since he has his new computer and has money in the bank. D. irrational, since money is fungible.