According to the monetarists, which of the following is true?
A. Instability in the money supply is the primary cause of economic instability.
B. A reduction in the money supply will cause consumers to increase spending.
C. A reduction in the money supply will cause a proportional reduction in wages and prices, leaving output unchanged.
D. A rapid growth rate of the money supply will lead to a rapid growth rate of real GDP.
Answer: A
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The balance of trade is the value of:
A. total goods sold by the U.S. to parties abroad. B. total goods purchased by the U.S. from abroad. C. exports minus the value of imports. D. imports minus the value of exports.
The problem the agent faces when deciding which agent to hire is called
a. Adverse selection b. Moral hazard c. Both of the above d. None of the above
To maximize profits in the short run, a perfectly competitive firm will produce the output at which:
a. marginal revenue equals demand. b. price equals marginal revenue. c. price equals marginal cost. d. marginal revenue equals average total cost. e. total revenue equals total cost.
Monetary policy
a. must be described in terms of interest-rate targets. b. must be described in terms of money-supply targets. c. can be described either in terms of the money supply or in terms of the interest rate. d. cannot be accurately described in terms of the interest rate or in terms of the money supply.