An increase in the money supply typically leads to
A. a reduction in the velocity of money.
B. an inward shift in money demand.
C. a decrease in the price level.
D. a reduction in the rate of interest.
Answer: D
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Explain why some amount of ignorance can be rational
What will be an ideal response?
A market maker faces the following demand and supply for widgets. Eleven buyers are willing to buy at the following prices: $15, $14, $13, $12, $11, $10, $9, $8, $7, $6, $5 . Eleven sellers are also willing to sell at the same prices. If the market maker is free to choose the number of transactions he can make, what is his maximum profit?
a. $8 b. $10 c. $18 d. $28
If the elasticity of demand for cigarettes is 0.4, then an increase in the price of a pack of cigarettes from $5.00 to $6.00 would reduce quantities demanded by about
a. 7 percent. b. 40 percent. c. 42 percent. d. 220 percent.
The courts in some states have declared the financing of public schools by local property taxes unconstitutional because
a. housing should never be the basis for taxation of any kind. b. taxes on real estate generate too much tax revenue. c. disparity in property values means some communities have more in tax revenues to spend on education than do communities containing less valuable property. d. the funds for public education should come from federal revenues, not from local property taxes.