The quantity of money is $1 billion, the price level is 1.10, and real GDP is $10 billion. What is the velocity of money?
What will be an ideal response?
The velocity of money equals 11.
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Which of the following monetary policies would be appropriate to close a recessionary gap?
a. A tax cut b. A decrease in government purchases c. An increase in reserve requirements d. The Fed's purchase of U.S. government securities e. The Fed's raising the discount rate
Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below.
If the government provides a subsidy of $500 per ton, then relative to before the subsidy, total economic surplus will ________ by ________ per day.
A. increase; $1,000 B. decrease; $6,500 C. decrease; $1,000 D. increase; $6,500
In insurance markets, moral hazard occurs when the behavior of
A) the insured person changes in a way that raises costs for the insurer, since the insured person no longer bears the full costs of that behavior. B) the insurer changes in a way that raises costs for the insured person, since the insurer no longer bears the full costs of that behavior. C) the insured person changes in a way that eliminates rising health care costs for the insurer, since the insured person no longer bears the full costs of that behavior. D) the insured person has an incentive to under consume medical services, simply because the insured person no longer bears the full cost of medical services.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, Point A necessarily represents
A. only hybrid cars being produced. B. an unattainable production point. C. what society wants. D. the economy's optimal production point.