In an economy in which real output grows at an average rate of 3 percent per year, a 7 percent average rate of growth in the money supply would result in a(n):
a. inflation rate of 4 percent, if velocity of money in circulation is constant.
b. inflation rate of -4 percent, if velocity of money in circulation is constant.
c. $7 increase in the price level each year
d. $7 decrease in the price level each year.
e. increase in the velocity of money in circulation.
a
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Which of the following examples best describes the Law of Diminishing Marginal Benefit?
A) If a seller of notebooks in a perfectly competitive market charges above the market price, his profit decreases. B) With each additional pen Jill buys, her willingness to pay for another pen decreases. C) Each additional unit of ice cream that John consumes gives him more and more satisfaction. D) If the weather gets cold, the demand for ice cream will fall.
The price of an airline ticket from Denver to Chicago costs $450. A bus ticket costs $150. Traveling by plane takes 2 hours compared with 32 hours by bus. Other things constant, Erica would gain by choosing air travel if, and only if, she values her time at more than
A) $5 per hour. B) $300 per hour. C) $10 per hour. D) $9.38 per hour.
To answer, refer to the following:"At Huffy's ... bicycle factory, 1,700 employees turn out 15,000 bicycles a day (in 1987). Five years before, it required 2,200 workers to make 10,000 bikes daily." (The Wall Street Journal). In 1987,
A. total product was 15,000 bicycles per day. B. the average product of labor was 0.11. C. the marginal product of labor was 8.8. D. both a and b E. both a and c
If a developing country has sufficient reserves, the buying and selling of foreign currency by the central bank is:
A. likely to have a much smaller impact on the exchange rate than in developed countries. B. completely ineffective on the exchange rate. C. likely to have a much greater impact on the exchange rate than in developed countries. D. likely to have roughly the same impact on the exchange rate as in developed countries.