Since classical economists believe that both V and Q are constants, the equation of exchange becomes a theory in which
a. the quantity of money explains prices
b. the quantity of money explains velocity
c. the quantity of money explains real GDP
d. changes in M cause changes in V
e. prices are never flexible
A
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A graph shows that as fees to use ATM machines increase, people use them less frequently. The graph of this relationship would show
A) an inverse relationship. B) a negative relationship. C) a direct relationship. D) Both answers A and B are correct.
In a command economy:
a. economic effort is devoted to goals passed down from a ruler or ruling class. b. economic effort is commanded by the people of a country. c. there is no coordinated economic effort. What you produce is what you get to consume. d. economic effort is determined by the government, businesses, and the people of a country.
If the price of inputs rises and foreign income rises:
a. Price index rises, and real GDP falls. b. Price index rises, and the change in real GDP is uncertain. c. Price index falls, and real GDP rises. d. Price index falls, and real GDP falls. e. Price index falls, and the change in real GDP is uncertain.
In a Floating Exchange Rate system:
(a) The government intervenes to influence the exchange rate. (b) The central bank intervenes to fix the exchange rate. (c) The exchange rate adjusts to equate the supply and demand of the currency. (d) None of the above