The hypothesis that changes in the money supply lead to proportional changes in the price level is called
A. the Keynesian multiplier.
B. the quantity theory of money and prices.
C. the theory of empirical relativity.
D. the equation of exchange.
Answer: B
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If Ricardian equivalence holds, one way to get the expansionary effects of a tax cut to occur is:
A. pair it with reduced government spending. B. pair it with increased government spending. C. to run a campaign inspiring people to buy goods made in the United States. D. None of these will create the expansionary effects of a tax cut.
Explain why the long-run average cost is typically U-shaped
The equilibrium interest rate:
A. affects both the size of total output and its composition. B. falls when the demand for loanable funds increases. C. determines the composition of R&D spending but not its total amount. D. increases when the expected rate of return on R&D spending falls.
The 3 key economic questions include all of the following EXCEPT:
A. "What products do we produce?" B. "How do we produce these products?" C. "Where should these products be produced?" D. "Who consumes the products?"