Which of the following statements is most correct?
A. Fisher's assumption about money velocity being stable in the long run was incorrect.
B. The velocity of M2 is relatively stable across all time periods.
C. The velocity of M2 is less stable than the velocity of M1.
D. The velocity of M2 is more volatile in the short run than the long run.
Answer: D
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According to the interest-rate-based perspective on the monetary policy transmission mechanism
A) changes in the money supply have little influence on macroeconomic variables. B) key channels of monetary policy indirectly ultimately relate money supply changes to total planned spending through indirect effects on planned investment. C) inflation is always caused by excessive monetary growth and changes in the money supply offset aggregate demand only directly. D) monetary policy leads to increases in the price level but will have no effect on the rate of output.
Arbitrage
A) is the act of buying an item at a low price and reselling the item at a higher price. B) is the act of selling an item on consignment and collecting a huge portion of the proceeds to compensate for the seller's time. C) is any act of buying and selling that results in the seller earning an above normal profit. D) is the act of buying an item at a low price, bundling it with another and selling the new package at a much higher price.
Which of the following is most likely to have declining opportunity costs?
A) a delivery van B) an apartment building in Manhattan C) an acre of land in San Francisco D) a park in downtown London
In perfect competition P = MR, but in monopoly P > MR. Why? Substantiate this statement with an example