Which of the following is true of the equation of exchange?
a. It states that the product of the price level and velocity of money is equal to real GDP.
b. It states that aggregate demand in an economy is equal to total investment spending.
c. It states that money supply times velocity of money equals real GDP
d. It states that velocity of money is equal to the ratio of nominal GDP and money supply.
e. It changes to the quantity theory of money if the price level is assumed to be constant.
d
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The classical economists argued that planned saving and planned investment will always be equal because of changes in
A) the level of real disposable income. B) the interest rate. C) the price level. D) wages.
Taxes create deadweight losses because they
a. reduce costs for firms. b. distort incentives. c. cause prices to decrease. d. create revenue for the government.
If the SRAS curve intersects the AD curve to the left of Natural Real GDP, the economy is
A) in a recessionary gap. B) at Natural Real GDP. C) in an inflationary gap. D) at full-employment Real GDP.
External government debt is:
A. government debt owed by one branch of the government to another. B. government debt owed to individuals in foreign countries. C. government debt owed to its own citizens. D. debt that individuals in foreign countries owe to the U.S. government.