Assume that M is $500 billion and V is 5. What is the level of nominal GDP according to the monetarist equation? If V rises by 10%, then according to the monetarist equation, what will be the new level of nominal GDP?
What will be an ideal response?
5 times $500 billion = $2500 billion GDP. If V rises by 10% to 5.5, then the new level of GDP should rise by 10% to $2750 billion or 5.5 times $500 billion = $2750 billion.
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Answer the following statement(s) true (T) or false (F)
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An effective price support ________ producers and ________ a deadweight loss
A) has no effect on; does not create B) benefits; creates C) harms; creates D) benefits; does not create E) harms; does not create
Refer to Figure 17-1. Suppose that the economy is currently at point A. If the Federal Reserve engaged in contractionary monetary policy, where would the economy end up in the short run?
A) It would remain at point A. B) point B C) point C D) point D E) point E
Movie theatres offer seniors discounts because
a. Seniors have a more inelastic demand for movie tickets b. Seniors have a more elastic demand for movie tickets c. Seniors have a higher opportunity cost of their time d. Only B&C