Is keeping money growth low when the central bank can accurately forecast real growth a guarantee that short-run inflation will not occur? Explain
What will be an ideal response?
No. The velocity of money can be volatile in the short run and increases in the velocity of money, even with low money growth, can cause the price level to increase well above the objectives set by policymakers. For policymakers to use money growth targets to stabilize inflation requires they understand how velocity changes.
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Computer processors and memory costs have decreased dramatically in the past 25 years. As a result, in the computer market, we have seen
A. an increase in demand. B. an increase in supply. C. a decrease in demand. D. a decrease in supply.
Arnold Kim began blogging about Apple products during his fourth year of medical school. Kim's Website, MacRumors
com, became so successful that he decided to give up his medical career and work full time on his Website, despite the nearly $200,000 he had invested in his education. In making his decision, the $200,000 he spent on his education A) should be considered since it is money he could have used to invest in his Website. B) should be ignored only if Kim can earn more than $200,000 by running his Website. C) should be considered since it is money he has spent and needs to recoup. D) should be ignored since it represents a sunk cost.
With marginal cost pricing
A) marginal benefits are usually less than marginal cost. B) all opportunity costs will be covered in the short run. C) the price charged is equal to the opportunity cost to society of producing one more unit of the good. D) there cannot be any short-run economic profit.
Five possibilities are equally likely and have payoffs of $2, $4, $6, $8, and $10 . The expected value is:
a. $4 b. $5 c. $6 d. $7