The change in the money supply in an economy is measured as:
a. the difference between the government deficit and government borrowing.
b. the sum of a change in high-powered money and the change in tax revenues.
c. the difference between government borrowing and government spending.
d. the ratio of the change in excess reserves to the deposit expansion multiplier.
e. the change in the government budget deficit.
a
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If U.S. inflation is 2%, Japanese inflation is 1%, and Mexican inflation is 3%, which of the following is true according to the theory of purchasing power parity?
A) The dollar should rise by 1% versus the yen and fall by 1% versus the peso. B) The dollar should rise by 1% versus the peso and fall by 1% versus the yen. C) The dollar should rise by 1% versus both the peso and the yen. D) The dollar should fall by 1% versus both the peso and the yen.
Who does the government borrow from?
What will be an ideal response?
A perfectly elastic demand curve
A. has a slope of -1. B. shows that a slight change in income will lead to a large reduction in price. C. shows that a slight increase in price will reduce quantity demanded to zero. D. is a vertical line drawn across from the quantity axis.
Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is:
A. $110. B. $30. C. $40. D. $70.