The belief that the velocity of money is not constant but highly predictable is associated with the:
A. classical school.
B. Keynesian school.
C. monetarist school.
D. rational expectations school
Answer: C
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Product differentiation makes the demand for a monopolistically competitive firm's product:
a. perfectly elastic. b. more elastic than for a monopoly. c. more inelastic than for a monopoly. d. perfectly inelastic.
A firm estimates that when output is 10, its total costs are $900 . It also finds that when output is 11, its total costs are $920 . The marginal cost of the eleventh unit of output is
a. $1 b. $20 c. $90 d. $900 e. $920
Policy makers and citizens who want to expand the size of the government sector would favor stabilization policies that
a. raise G to eliminate a recessionary gap and lower taxes to eliminate an inflationary gap. b. raise G to eliminate a recessionary gap and raise taxes to eliminate an inflationary gap. c. reduce taxes to eliminate a recessionary gap and raise G to eliminate an inflationary gap. d. reduce taxes to eliminate a recessionary gap and reduce G to eliminate an inflationary gap.
Which of the following statements is false?
A) Purchasing power and the price level are inversely related. B) The real balance effect refers to the change in the purchasing power of dollar-denominated assets as a result of a change in the price level. C) The aggregate demand curve slopes downward because of the real balance, interest rate, and international trade effects. D) A change in the quantity demanded of Real GDP is directly brought about by a change in interest rates.