Refer to the graph shown. The difference between total surplus in equilibrium and total surplus when price is $8.15 and quantity is 220 is:
A. 600.
B. 405.
C. 423.5.
D. 810.
Answer: B
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Assume that a central bank with a history of inflation announces that it is going to reduce money growth and inflation. According to the rational expectations model, the public will
a. immediately reduce their expected price level and inflation. b. reduce their expected price level if this announcement is credible. c. reduce their money and real wages if this announcement is credible. d. immediately be open to reducing their money wage. e. both b and c.
The hypothesis that changes in the money supply lead to an equiproportional change in the price level is called
A) the quantity theory of money. B) the classical theory of money. C) the Keynesian theory of money. D) the fractional theory of money.
The only way by which government can affect aggregate demand is through changes in its own purchases
a. True b. False Indicate whether the statement is true or false
Economic theory suggests that the standard of living of American workers would fall if the
a. United States had more natural resources. b. knowledge and skills of workers improved, reducing the need for workers. c. productivity of American workers declined. d. United States turned to more automated methods of production.