The proposition that the velocity of money is fairly constant in the long run is known as the ________
A) neutrality of money
B) classical dichotomy
C) quantity theory of money
D) Fisher effect
E) none of the above
E
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Refer to the scenario above. If Sarah is optimizing in differences, then which of the following statements is true?
A) An optimizer will rent the hotel room for three days if the net benefit of staying for three days exceeds the net benefit of staying for two days. B) An optimizer will rent the hotel room for three days if the cost of staying for the first two days is less than the cost of staying for the third day. C) An optimizer will rent the hotel room for three days if the benefit of staying for the third day exceeds the benefits of staying for the first two days. D) An optimizer will rent the hotel room for three days if the benefit of staying for the third day exceeds the cost of staying for the third day.
If velocity is constant, which of the following results flow from the quantity equation?
A) Nominal GDP could change only if there were a change in the money supply. B) In the short run, nominal GDP could change only if there were a change in the money supply and in the long run, nominal GDP could change only if there were a change in the money supply. C) In the short run, nominal GDP could change only if there were a change in the money supply but in the long run, nominal GDP is affected by changes in any component of GDP. D) In the short run, nominal GDP is affected by changes in any component of GDP but in the long run, nominal GDP could change only if there were a change in the money supply.
Answer the following questions true (T) or false (F)
1. A cash withdrawal reduces deposits, reserves, and excess reserves in the banking system. 2. Banks hold 100% of their checking deposits as vault cash to ensure that bank runs do not occur. 3. A series of bank runs in a country should have no effect on M1 as money simply moves from checking deposits to currency.
An indifference curve
A) connects a set of consumption bundles among which the consumer is indifferent. B) is only useful in analyzing apathetic consumers. C) connects a set of consumers who each have the same preferences. D) is only useful in microeconomics.