In the modern Keynesian model, velocity
a. varies positively with the level of the interest rate but not with income.
b. varies positively with the level of the interest rate and with income.
c. is constant.
d. varies in the short run but is constant in the long run.
e. none of the above
A
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The shoe leather costs of inflation include all of the following except:
A. the cost of more frequent trips to the bank. B. the installation of a new cash management system. C. the extra costs incurred to avoid holding cash. D. the lost purchasing power of cash.
If choice architects frame choices in terms of social norms people will:
A. behave according to how they view that norm. B. behave with the majority. C. be unaffected by what the majority is doing. D. behave in the opposite way, because "going rogue" is celebrated in our culture.
The reserve ratio is 20 percent. The Fed buys $1 million in government securities from a bond dealer by transmitting the funds to the dealer's deposit account at Bank A. Bank A makes the maximum loan possible to a construction company, which buys materials with the loan. The check is deposited in Bank B, which loans out all it can to a car dealership. To this point, the money supply has increased by
A. $3 million. B. $1 million. C. $1.8 million. D. $2.44 million.
A monopolistically competitive firm faces a downward-sloping demand curve because
A) it is able to control price and quantity demanded. B) there are few substitutes for its product. C) of product differentiation. D) its market decisions are affected by the decisions of its rivals.