In the short run, which are most important in determining changes in output?
a. marginal costs and marginal revenue.
b. total costs and total revenue.
c. average costs and total revenue.
d. fixed costs.
A
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Use the following table to answer the next question. The money supply and investment are in billions.Money Supply (billions of dollars)Interest RateInvestment (billions of dollars)$507%$100606110705120804130903140 Assume that the MPC is 0.8 and the reserve requirement is 0.1. If the Federal Reserve needs to increase aggregate demand by $100 billion at each price level to move the economy back to full employment and the current interest rate is 7%, then the Federal Reserve should ________ bonds on the open market equal to ________.
A. sell, $2 billion B. sell, $4 billion C. buy, $4 billion D. buy, $2 billion
The essential difference between paper money and coins as forms of money is that
A) paper money serves as a unit of account while coins do not. B) the metallic content of coins makes them more acceptable as money. C) paper is paper and not metal. The metal is more durable. D) paper money issued by the Federal Reserve Board is backed by gold while coins are not.
Velocity of money is the ratio of ________
A) real GDP to money demand B) money supply to money demand C) nominal GDP to money supply D) nominal GDP to money demand
The aggregate demand curve is downward sloping because as the price level increase the
A) purchasing power of wealth decreases B) demand for imports decreases C) demand for interest-sensitive expenditures increases D) demand for domestically produced substitute goods increases E) real value of fixed assets increases