If the asset market is in equilibrium, the growth rate of the nominal money supply minus the growth rate of real money demand equals
A. the inflation rate.
B. the price level.
C. the real interest rate.
D. the growth rate of real output.
Answer: A
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Why do property rights increase research and development (R & D) for many companies?
A. Property rights do not increase research and development. B. Property rights reduce the risk of others stealing your work. C. Property rights incentivize buyers to purchase the company's products. D. Property rights always increase profits, so companies have more money to spend on R & D.
A newspaper story on the effect of higher milk prices on the market for ice cream contained the following:
"As a result [of the increase in milk prices], retail prices for ice cream are up 4 percent from last year. . . . And ice cream consumption is down 3 percent." Source: John Curran, "Ice Cream, They Scream: Milk Fat Costs Drive Up Ice Cream Prices," Associated Press, July 23, 2001. Based on the information given, what is the price elasticity of demand for ice cream? A) 12% B) 0.75 (in absolute value) C) 1.33 (in absolute value) D) We do not have enough information to calculate the elasticity.
If producers have imperfect information about the general price level and sometimes misinterpret changes in the general price level as changes in relative prices, then
A) the short-run aggregate supply curve is vertical. B) the short-run aggregate supply curve slopes upward. C) the aggregate demand curve is vertical. D) the aggregate demand curve is horizontal.
Refer to the above figure. Unexpected contractionary monetary policy has caused the aggregate demand curve to shift to AD2. In the long run
A. real GDP will be Y1, and the price level will be P1. B. real GDP will be between Y1 and Y2, and the price level will be above P1. C. real GDP will be Y1, and the price level will be below P2. D. real GDP will be Y2, and the price level will be P2.