Looking at historical evidence for the United States and other countries, which of the following are TRUE?
I. There is a correlation between the growth rate of the quantity theory of money and the growth rate of real GDP.
II. There is a correlation between the growth rate of the quantity theory of money and the inflation rate.
A) Only I is true.
B) Only II is true.
C) Both I and II are true.
D) Neither I or II is true.
B
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Holding demand constant, a reduction in supply leads to
A) lower prices and higher quantity demanded. B) lower prices and lower quantity demanded. C) higher prices and higher quantity demanded. D) higher prices and lower quantity demanded.
Suppose prices for new homes have risen, yet sales of new homes have also risen. We can conclude that:
a. the demand for new homes has risen. b. the law of demand has been violated. c. new firms have entered the construction industry. d. construction firms must be facing higher costs.
A country has a trade deficit. Which of the following must also be true?
a. net capital outflow is positive and domestic investment is larger than saving b. net capital outflow is positive and saving is larger than domestic investment c. net capital outflow is negative and domestic investment is larger than saving d. net capital outflow is negative and saving is larger than domestic investment
Arguments in support of protectionism (and against free trade) include all of the following EXCEPT
A) new and troubled industries need to be protected until they acquire sufficient strength to compete equally against their foreign counterparts. B) jobs at home should be protected from cheap foreign labor. C) protectionism increase total domestic consumption possibilities. D) national security interests require that nations retain the ability to produce vital materials at home and avoid dependence upon potential enemies.