From the quantity equation we find that the rate of inflation is equal by definition to the growth rate of the money supply ________ the growth rate of velocity ________ the growth rate of real GDP
A) plus, plus
B) plus, minus
C) minus, plus
D) minus, minus
B
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If the level of investment spending increases by $100 and the MPC in the economy is 0.8, then the cumulative spending increase after three rounds of spending is
A. $280. B. $260. C. $244. D. $220.
f the Fed wants to increase bank reserves, it can:
A. Raise the discount rate. B. Buy government bonds from the public. C. Increase the minimum reserve ratio. D. Decrease the money multiplier.
Consider a graph of a production possibilities curve. If a producer is operating at an inefficient point, then that producer:
A. must be specializing in activities for which it has a comparative advantage. B. cannot produce more of one good without giving up some of the other good. C. can produce more of one good without producing less of the other good. D. must be at an unattainable point on the production possibilities curve.
Given the expected rate of return on all possible investment opportunities in the economy, a(n):
a. Change in the interest rate will have no impact on the level of investment b. Decrease in the rate of interest will tend to decrease the level of investment c. Decrease in the rate of interest will tend to increase the level of investment d. Increase in the rate of interest will tend to increase the level of investment