Is the equation of exchange an economic model?
A. Yes, it is a simple but powerful model.
B. No, economic models cannot be equations.
C. No, it is merely an arithmetic statement.
D. Yes, it is a cause-and-effect model.
Answer: C
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In the short run, a rise in the price level brings a ________ in the real interest rate that ________ investment, bringing ________ in the quantity of real GDP demanded
A) rise; decreases; a decrease B) fall; decreases; a decrease C) fall; increases; an increase D) rise; increases; an increase E) rise; decreases; an increase
The decision about what goods and services will be produced in a centrally planned economy is made by
A) producers deciding what society wants most. B) lawmakers in the government deciding on what will be produced. C) consumers dictating to firms what they need most. D) workers deciding to produce only what the boss says must be produced. E) consumers and firms choosing which goods and services to buy or produce.
The outcome of the Stackelberg model is
A) a Nash equilibrium. B) the same as the Cournot outcome. C) that the follower earns zero profit. D) that the follower cannot be on its best-response curve.
The main source of government funding is
A. transfer payments. B. borrowing. C. taxes. D. interest earned from holding bonds.