The quantity equation states that
A) the money supply (M) divided by the velocity of money (V) equals the price level (P) divided by real output (Y), i.e., M/V = P/Y.
B) M × V = P × Y.
C) M + V = P + Y.
D) M - V = P - Y.
Answer: B
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Refer to the scenario above. What will the outcome of this game be?
A) Both players will choose black. B) Both players will choose white. C) Arthur will choose white and Catherine will choose black. D) Catherine will choose white and Arthur will choose black.
Pietro is a manager at a carwash. He has hired 10 workers to wash and detail cars for him and is considering what type of payment scheme he should set up for his workers
He can pay each of his workers $9 per hour to wash and detail cars, or he can pay his workers $12 for each car a worker washes and details. (It takes 75 minutes, on average, for an employee to wash and detail a car.) If Pietro wants to maximize the number of cars his workers wash and detail in one day, which payment scheme should he use? Explain.
Refer to Figure 26-11. In the dynamic model of AD-AS in the figure above, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in
A) real GDP lower than what would occur if no policy had been pursued. B) short-term interest rates higher than what would occur if no policy had been pursued. C) unemployment rates higher than what would occur if no policy had been pursued. D) inflation higher than what would occur if no policy had been pursued.
A temporary supply shock, such as an increase in oil prices, would
A) shift the IS curve down and to the left and leave the FE line unchanged. B) shift the IS curve down and to the left and shift the FE line to the left. C) shift the IS curve up and to the right, but leave the FE line unchanged. D) have no effect on the IS curve.