The reason that velocity increases when interest rates rise is
a. the Fed encourages banks to turn money in faster for recycling, which causes money to move faster.
b. the opportunity cost of saving increases, so people hold smaller cash balances.
c. home mortgage payments increase, so people write larger checks that reduces their checking account balances.
d. the opportunity cost of holding money increases, so average money balances decrease.
d
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One of the benefits of specialization is
A) greater output. B) people enjoy doing one repetitive task over and over. C) specialists cost less to hire. D) training costs are higher.
It is important to understand oligopoly markets because:
a. although few real world markets are oligopolies, their existence raises interesting theoretical questions. b. oligopolies typically generate more deadweight loss than monopolies. c. oligopolies can generate a whole range of possible outcomes between monopoly and perfect competition. d. one can predict the market outcome exactly just by knowing the number of firms in the market.
If the MPP of an additional unit of labor is 4 units per hour, product price is constant at $5 per unit, and the wage rate is $19 per hour, then
A. The employer should lower wages and accept less employment of labor. B. The additional unit of labor should be employed. C. Product price must be reduced if profits are to be made. D. The additional unit of labor should not be employed because it costs more than it is worth.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2. B. P2 and Y3. C. P3 and Y1. D. P2 and Y2.