If the interest rate rises, a profit-maximizing firm will tend to
a. invest in more projects (such as new plants) with payoffs in the future.
b. invest in fewer projects with payoffs in the future.
c. increase both current output and future output.
d. reduce both current output and future output.
b
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Suppose the velocity of money is not fixed, but stable at about 4% growth per year
How could the quantity theory of money be modified to include a stable growth rate of the velocity of money? In this modified version with velocity growing at about 4% per year, what would the growth rate of the other variables need to be to cause inflation?
Which of the following is an example of an injection into the circular flow of income and expenditure?
a. Net taxes b. Saving c. Transfer payments d. Government borrowing e. Disposable income
Which of the following is uncharacteristic of monopolistic competition in the long run?
a. a large number of sellers in the industry b. zero economic profits c. price in excess of marginal cost d. firms have no excess capacity
Michael takes 10 minutes to iron a shirt and 20 minutes to type a paper. Aiden takes 10 minutes to iron a shirt and 30 minutes to type a paper. Which of the following statements is correct?
a. Aiden has a comparative advantage in ironing. b. Aiden has a comparative advantage in typing. c. Michael has a comparative advantage in ironing. d. Neither can gain from specialization and exchange.