For a fixed money supply, a higher level of real balances implies
A. a higher price level.
B. a lower price level.
C. higher velocity of money.
D. lower velocity of money.
Ans: B. a lower price level.
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Redbox rents DVDs for $1 per day via self-service kiosks located across the United States. In 2007, each kiosk averaged about 50 rentals per day. Suppose Redbox increases their daily price to $1.50
What is the price elasticity of demand if rentals decrease by 20 per day? A) 1.25 B) 1.33 C) 1 D) 0.8
Suppose the Fed bought $150 million of U.S. securities from security dealers. The reserve requirement is 20 percent, and there are no initial excess reserves. A few weeks later, if the public's holdings of currency are constant and the banks have loaned all excess reserves, the money supply will increase by:
a. $150 million. b. $300 million. c. $600 million. d. $750 million.
If the economy is operating at the natural rate of unemployment, which of the following is essentially eliminated?
a. frictional unemployment b. structural unemployment c. cyclical unemployment d. all of the above
European governments accepted prolonged periods of unemployment in the 1990s in order to reduce inflation
a. True b. False Indicate whether the statement is true or false