Suppose velocity does not change. Then, in the long run, a growth rate of the quantity of money that exceeds growth in real GDP has what effect?
What will be an ideal response?
In the long run, growth in the quantity of money that exceeds growth in real GDP brings inflation. With velocity constant, the inflation rate equals the growth rate of the money supply minus the growth rate of real GDP.
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A competitive equilibrium
A) is always economically efficient. B) is efficient only if there is an externality. C) is economically efficient only given some special conditions. D) does not exist without government taxation.
For a cruise liner deciding how to price its rooms, if the cost of overpricing is lower than the cost of underpricing, then the management of the cruise liner should
a. Price lower than what they expect would fill capacity b. Price higher than what they expect would fill capacity c. Price such that they would expect to just fill capacity d. None of the above
Bob purchases a book for $6, and his consumer surplus is $2 . How much is Bob willing to pay for the book?
a. $6. b. $2. c. $8. d. $4.
If a monopoly suddenly became a perfectly competitive industry, equilibrium output would _________, and the equilibrium price would _________.
a. increase; increase b. decrease; decrease c. increase; decrease d. decrease; increase