If the Federal Reserve decided to include virtual money like Bitcoins in its measure of the money supply, what would be the effect on M1 or M2?
A) M1 would rise.
B) M1 would fall.
C) M1 would rise and M2 would remain constant.
D) M2 would rise but M1 would remain constant.
Answer: A
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Compare and contrast Say's views of the macroeconomy with that of Keynes. What does each have to say about the economy in relationship to its potential level of real GDP?
What will be an ideal response?
As the number of substitutes for a good increases, the absolute value of its own-price elasticity
a. stays the same b. increases c. decreases d. the good becomes perfectly inelastic.
Which of the following policies could the Fed use to lower the interest rate?
a. A tax cut. b. Selling government securities. c. Raising the discount rate. d. Reducing the required reserve ratio.
A monopoly produces widgets at a marginal cost of $10 per unit and zero fixed costs. It faces an inverse demand function given by P = 50 ? Q. Suppose fixed costs rise to $400. What happens in the market?
A. The firm will reduce its output and raise price. B. The firm continues to produce the same output and charge the same price. C. The firm will raise the price. D. The firm will shut down immediately.