In the long run, the real interest rate is 3 percent, real GDP grows at 4 percent, velocity is constant, and the quantity of money grows at 6 percent. The nominal interest rate is
A) 3 percent. B) 10 percent. C) 5 percent. D) 6 percent. E) 4 percent.
C
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According to the gravity model, a characteristic that tends to affect the probability of trade existing between any two countries is
A) their cultural affinity. B) the average weight/value of their traded goods. C) their colonial-historical ties. D) the distance between them. E) the number of different product varieties produced by their industries.
What is the consequence of a positive externality in a market? What is the consequence of a negative externality? Why those consequences occur?
What will be an ideal response?
From an economic viewpoint, the optimal amount of pollution:
a. is zero since all pollution imposes costs on society. b. is that amount which firms create when they maximize economic profits by setting their marginal private costs equal to market price. c. is that amount where the marginal social costs of producing a good precisely equals the price of the good. d. b and c are correct.
When the price of a key input increases suddenly, it causes:
A. the velocity of money to rise. B. demand pull inflation. C. cost push inflation. D. the business cycle to become sporadic.