What is larger: M1 or M2? Why?
What will be an ideal response?
M2 is larger than M1. M2 includes M1 plus additional assets, so M2 must be larger than M1. In June, 2011, M1 was approximately $1,950 billion and M2 was about 5 times larger at approximately $9,100 billion.
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The value of goods produced, but unsold, in the current period is:
A. allocated to GDP in future periods when the goods are sold. B. counted in GDP as consumption spending. C. excluded from GDP. D. counted in GDP as inventory investment.
If the labor supply is unchanged, an increase in the demand for labor will
A) increase the equilibrium wage and increase the quantity of jobs demanded. B) increase the equilibrium wage and decrease the number of workers employed. C) decrease the equilibrium wage and increase the number of workers employed. D) increase the equilibrium wage and increase the number of workers employed.
Transfer payments, like Social Security, are known as entitlements since ________
A) they are locked up by earlier legislation B) the individuals who receive these payments are poor and deserve our support C) the individuals who receive these payments made payments to the federal government in excess of the monies they draw from the system D) these monies tend to rise in an economic downturn
If the long-run supply curve slopes upward, we know that this is
A) a decreasing-cost industry. B) a constant-cost industry. C) an increasing-cost industry. D) a situation in which no input prices change as firms enter and exit the industry.