If velocity of money is constant; real growth in the output of the economy is +2.5%; and inflation is 2.0%; what is the growth rate of money?
What will be an ideal response?
Here we can employ the percentage change form of the equation of exchange where: %?M + %?V = %?P + %?Y. Inserting the known values and solving for the %?M we obtain: %?M + 0 = 2.0 + 2.5 or %?M = 4.5.
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If a firm operates in a perfectly competitive market, then it will most likely
A) advertise its product on television. B) settle for whatever price is offered. C) have a difficult time obtaining information about the market price. D) have an easy time keeping other firms out of the market.
Economists study perfect competition
A. because many markets are perfectly competitive. B. for its descriptive realism. C. to establish a benchmark by which to measure the performance of the economy. D. All of the responses are correct.
Lars is CEO of a large monopolistic firm. He looks at what is going on with revenues and pricing, and being knowledgeable about running a monopoly, he decides to reduce production. What does this tell us about his firm?
a. Marginal cost is equal to marginal revenue. b. Marginal revenue is exceeding marginal cost. c. Marginal cost is exceeding marginal revenue. d. Marginal revenue is equal to price.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4Refer to Figure 2.4. The economy moves from Point A to Point D. This could be explained by
A. an increase in economic growth. B. a change in society's preferences for motorcycles versus hybrid cars. C. a reduction in unemployment. D. an improvement in technology.