Other things being equal, the quantity theory of money suggests that any increase in the money supply
A. causes a reduction in the demand for money.
B. causes the aggregate level of nominal Gross Domestic Product (GDP) to fall.
C. results in a proportionate increase in the price level.
D. results in a decrease in the aggregate price level.
Answer: C
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As the economy contracts, tax revenues
A. rise and transfer payments rise, causing the economy to contract by more than it would in the absence of automatic stabilizers. B. rise and transfer payments fall, causing the economy to contract by less than it would in the absence of automatic stabilizers. C. fall and transfer payments fall, causing the economy to contract by more than it would in the absence of automatic stabilizers. D. fall and transfer payments rise, causing the economy to contract by less than it would in the absence of automatic stabilizers.
If everyone has identical preferences over public goods, Lindahl prices for providing the efficient level of the public good will be the same for everyone.
Answer the following statement true (T) or false (F)
Which of the following statements is true?
A) All rational economic agents attempt to maximize their income. B) A rational consumer makes his decisions depending on what the majority chooses. C) A budget constraint is an economic tool that quantifies the trade-off between consumption of two goods. D) A trade-off refers to the exchange of goods between economic agents through a barter system or mutual exchange.
Imagine you are a buyer in a double oral auction with a reservation value of $10 and there is a seller asking $8
a. How much will you gain from accepting this offer? b. If you are the only buyer, and you know that the lowest ask price is $2, should you accept this offer?