If real GDP grows by 3 percent, the velocity of circulation grows by -4 percent, and the quantity of money grows by 3 percent, then in the long run the inflation rate is
A) 1 percent. B) -1 percent. C) 4 percent. D) -4 percent. E) 10 percent.
D
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When actual output is less than potential output, there is ________ output gap and the rate of inflation will tend to ________.
A. an expansionary; increase B. a recessionary; increase C. an expansionary; decrease D. a recessionary; decrease
Suppose the short-run production function is q = 10 ? L. If the wage rate is $10 per unit of labor, then AVC equals
A) q. B) q/10. C) 10/q. D) 1.
Leisure time is not subject to diminishing marginal utility
a. True b. False
Suppose the value of income elasticity of demand for a private college education is equal to 1.5 . This means that:
a. every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education. b. every $1.50 increase in income provides an incentive for a $1 increase in expenditures on private college education. c. a 10 percent increase in income causes a 15 percent increase in the quantity of private college education purchased. d. a 15 percent increase in income causes a 10 percent increase in the quantity of private college education purchased. e. a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent.