Given the strict quantity theory of money, if the quantity of money doubled, prices would:
a. fall by half.
b. double.
c. remain constant.
d. increase somewhat but less than double.
b
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Consider an industry that produces an output Q with marginal private cost (MC) and marginal social cost (MSC) as given in the table:
Q MC MSC 1 2 4 2 4 7 3 6 10 4 8 13 5 10 16 Which of the following is TRUE? A) The production of each additional unit results in a larger marginal external cost. B) The production of each additional unit results in the same marginal external cost. C) The production of each additional unit results in a lower marginal external cost. D) There are no marginal external costs associated with the production of this good.
What type of business is the easiest to set up?
A) corporation B) sole proprietorship C) partnership D) There is no difference in the ease of establishment.
Suppose technical change permits cable television companies to provide their services at lower rates. The share-the-gains, share-the-pains theory would predict that the regulators would
A) permit the firms to keep the savings and would lower prices only if the firms were pressured to do so. B) force the firms to pass all the savings on to consumers in the form of lower prices. C) force the firms to pass the savings on to consumers in the form of better service. D) force the firms to pass some of the savings on to consumers and to permit the firms to keep some of the savings themselves.
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower