The quantity theory of money is a theory of how
A) the money supply is determined.
B) interest rates are determined.
C) the nominal value of aggregate income is determined.
D) the real value of aggregate income is determined.
C
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Permanent resource price differentials are caused by
a. differences in resource quality b. differences in the time and training required to perform the job c. differences in nonmonetary aspects of the job d. a lack of resource mobility e. all of the above
Rational expectations theorists believe that governments publicizing their economic goals ______.
a. is necessary to educate the people, so they behave as intended b. leads people to act in their own interests and undercut the government’s intended outcomes c. prevents people from being able to anticipate the future of the economy d. is the most important step in being able to meet the government’s goals
Assume a drought in the Great Plains reduces the supply of wheat. Since wheat is a basic ingredient in the production of bread and potatoes are a consumer substitute for bread, we would expect the price of wheat to:
A. fall, the supply of bread to increase, and the demand for potatoes to increase. B. rise, the supply of bread to decrease, and the demand for potatoes to decrease. C. rise, the supply of bread to increase, and the demand for potatoes to increase. D. rise, the supply of bread to decrease, and the demand for potatoes to increase.
Which of the following reasons explain why a natural monopoly might exist?
A. The government has banned other firms from entering the market. B. The good or service is not proprietary. C. Extremely high start-up costs. D. A cartel owns the natural resource.