Assume the following situation. In year 1, a $400 capital stock generates a $100 GDP. One-fifth, or $20 of the $100 GDP, is put into investment. The capital/output ratio in year 1 is
a. 0.25
b. 1
c. 4
d. 100
e. 400
C
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If supply is perfectly inelastic, a sales tax imposed on sellers is paid by
A) only the buyers. B) only the sellers. C) both the buyers and sellers. D) None of the above answers is correct.
When the economy is already operating at nearly full capacity, further fiscal or monetary stimulus will likely:
a. soften inflationary pressures in sectors already at capacity, and increasing employment in sectors with excess capacity. b. trigger inflationary pressures in sectors already at capacity, and decreasing employment in sectors with excess capacity. c. soften inflationary pressures in sectors already at capacity, and decreasing employment in sectors with excess capacity. d. trigger inflationary pressures in sectors already at capacity, and increasing employment in sectors with excess capacity.
Any item that people can use to transfer purchasing power from the present to the future is called
a. a medium of exchange. b. a unit of account. c. a store of value. d. None of the above is correct.
Suppose velocity = 5, money supply = $200, and price = 2. What is the value of real GDP?
A) $10 B) $40 C) $400 D) $500