If an economy produces 1,000 units of output with a price level of $5 and the money supply (M) is $1,000, velocity is:
A. 50.
B. 200.
C. 5.
D. 2.
Answer: C
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The income elasticity of demand is a measure of the responsiveness of the
A) quantity of a good demanded to changes in income. B) consumer's income to a change in the price of the goods he or she consumes. C) quantity of a good demanded to changes in its price. D) quantity of a good demanded to changes in another good's price.
If the required reserve ratio decreases, the:
a. money multiplier increases. b. money multiplier decreases. c. amount of excess reserves the bank has decreases. d. money multiplier stays the same. e. amount of excess reserves stays the same.
Aggregate expenditure in the U.S. economy includes spending for U.S. output by
a. households and businesses, but not governments. b. households, businesses, and the federal government, but not state and local governments. c. households, businesses, and all governments except foreign ones. d. households, businesses, and governments, both domestic and foreign.
A country produces two goods, soda and chips. It currently exports soda and imports chips. If it were to impose a tariff on chips,
a. both imports of chips and exports of sodas would rise. b. imports of chips would rise, but exports of sodas would fall. c. imports of chips would fall, but exports of sodas would rise. d. both imports of chips and exports of sodas would fall.