According to the classical view, to prevent price level changes when real output is growing by 3 percent per year,
a. the money supply must decrease by 3 percent per year
b. the money supply must increase by 3 percent per year
c. the money supply must increase by more than 3 percent per year
d. the money supply must remain constant
e. velocity must decrease by 3 percent per year
B
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The burden of a tax falls entirely on sellers if ________
A) the price elasticity of demand is unitary elastic B) the price elasticity of supply is greater than 1 C) the income elasticity of demand is high D) the price elasticity of supply is zero (perfectly inelastic)
How is the quantity theory of money different from the quantity equation, and why must the quantity equation always be true?
What will be an ideal response?
The life cycle hypothesis explains the long run constancy of the savings rate and short run variability of savings rate provided
A) the proportions of working and retired people are constant in each historical era. B) the saving behavior of each age group does not change from generation to generation. C) A and B are both required to explain the apparent contradiction. D) Friedman's PIH is in error.
Price elasticity of supply
a. is always a number between 0 and 1 b. is always a negative number c. is always greater than or equal to 0 d. is always greater than 1. e. can take on any value.