The rules-based monetary policy reads: The money supply will increase 3 percent each year. If the average annual growth rate in Real GDP is 2 percent and velocity increases by 1 percent each year, it follows that
A) the price level will, on average, rise 2 percent a year.
B) the price level will rise 2 percent this year.
C) in some years the price level will rise by more than in other years.
D) in some years the price level may not change at all.
E) a, c and d
E
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The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm has excess capacity of
A) 4 units. B) 8 units. C) 16 units. D) $10.
Refer to Figure 4-3. If the market price is $3.00, what is the consumer surplus on the second ice cream cone?
A) $0 B) $0.50 C) $3.00 D) $5.50
In the long run, which of the following conditions is true for a monopolistically competitive firm?
A. P > AC and MR = MC. B. P = MC and MR > AC. C. P = AC and MR = MC. D. P > MR and P > AC.
Taxes and transfer payments automatically reduce fluctuations in real GDP and thereby stabilize the economy without any need for decisions from Congress or the White House.
Answer the following statement true (T) or false (F)