According to the equation of exchange, an increase in either velocity or the money supply will
A. cause GDP to rise.
B. not affect the price level.
C. cause the price level to fall.
D. cause GDP to fall.
A. cause GDP to rise.
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Discounting
What will be an ideal response?
Prices usually allocate resources efficiently because they allocate
A. consumption to the highest cost of good or service.
B. resources to the lowest value good or service.
C. consumption to the lowest value good or service.
D. resources to the highest value good or service.
The general view of economists is that a pure monopoly will not be technologically progressive.
Answer the following statement true (T) or false (F)
Suppose that an Italian ice cream firm is facing a linear demand curve and that the current price for the Italian ice cream is set at a point where the price elasticity is 0.7. If the firm decreases the product price,
A. the demand becomes more inelastic and total revenue increases. B. the demand becomes more inelastic and total revenue decreases. C. the demand becomes less inelastic and total revenue increases. D. the demand becomes less inelastic and total revenue decreases.