According to the quantity theory of money, which one of the following economic variables would change in response to an increase in the money supply?
A. prices
B. real income
C. velocity
D. employment
Answer: A
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A country initially has an equilibrium real interest rate of 4 percent and an equilibrium quantity of investment of $2 trillion. The government's budget deficit then increases. According to the crowding-out effect, the
A) demand for loanable funds curve shifts rightward, the real interest rate rises, and investment decreases. B) supply of loanable funds curve shifts rightward, the real interest rate rises, and investment increases. C) supply of loanable funds curve shifts leftward, the real interest rate falls, and investment decreases. D) demand for loanable funds curve shifts leftward, the real interest rate falls, and investment increases. E) demand for loanable funds curve shifts rightward, the real interest rate falls, and investment increases.
The economy recovers quickly from most recessions, but the increase in adverse selection and moral hazard problems in the credit markets caused by ________ led to the severe economic contraction known as The Great Depression
A) debt deflation B) illiquidity C) an improvement in banks' balance sheets D) increases in bond prices
If the quantity of money demanded is not affected by changes in the interest rate, the LM curve is ________ and fiscal policy will be ________
A) horizontal; very effective B) horizontal; ineffective C) vertical; ineffective D) vertical; very effective
In the late 19th century, increases in productivity in the _________ industry were driven mostly by innovation, while increases in productivity in the ________ industry were driven by both invention and innovation
a. men's clothing; grain milling b. boot and shoe; cotton textile c. cotton textile; boot and shoe d. boot and shoe; men's clothing