The inflation rate in January of 2009 as measured by the CPI was zero. If inflation were to remain at zero for a long period, what would be the effect on velocity?
a. It will decrease.
b. It will increase.
c. It will remain constant.
d. Velocity is unrelated to interest rates.
a
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Which of the following is an example of structural unemployment?
a. The rise in unemployment for horse-stable workers after the development of gasoline-powered automobiles. b. The rise in unemployment among farm workers after harvest. c. The unemployment associated with workers changing jobs. d. The increase in unemployment during recession.
A monopolistic competitor is producing a level of output at which price is $200, marginal revenue is $100, average total cost is $210, marginal cost is $100, and average variable cost is $180. In order to maximize profit, the firm should
A. keep output the same. B. shut down. C. increase output. D. decrease output.
Two major virtues of the market system are that it:
A. allocates resources efficiently and allows economic freedom. B. results in an equitable personal distribution of income and always maintains full employment. C. results in price level stability and a fair personal distribution of income. D. eliminates discrimination and minimizes environmental pollution.
If the stock of money is $40 billion, velocity is 3, and real output is $60 billion, what is the price level?
A. 0.5 B. 2 C. 2.5 D. 4