If an economy produces 1,000 units of output with a price level of $1 and the money supply (M) is $500, velocity is:
A. 2.
B. 5.
C. 50.
D. 500.
Answer: A
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The open economy effect suggests that
A) a decrease in domestic price level will cause foreign residents to buy more domestic goods, increasing net exports. B) a rise in domestic price level will cause domestic residents to buy fewer imported goods. C) a rise in domestic price level will cause foreign residents to buy more domestic goods. D) a decrease in domestic price level will cause foreign residents to buy fewer domestic goods, increasing net exports.
If supply is upward-sloping and demand is downward sloping, what happens to the equilibrium real risk-free interest rate and quantity of real loanable funds per time period if there is a decrease in the expected rate of inflation?
a. The real risk-free interest rate rises and the quantity per time period falls. b. The real risk-free interest rate rises and the quantity per time period rises. c. The real risk-free interest rate does not change and the quantity per time period does not change. d. The real risk-free interest rate rises and the quantity per time period is uncertain. e. The real risk-free interest rate is uncertain and the quantity per time period is uncertain.
A monopolist produces where P > MC = MR
a. True b. False Indicate whether the statement is true or false
In the Hotelling Rule, which of the following will not cause the price of an exhaustable natural resource to rise
a) An unanticipated fall in interest rates b) An unanticipated rise in demand c) An unanticipated fall in supply d) An unanticipated rise in the backstop price e) An unanticipated rise in interest rates