According to the quantity theory of money, if the monetary authorities allow the money supply to grow at a rate of 6 percent in an economy that is growing by 2 percent in real terms, then inflation will be:
A. 4 percent.
B. 6 percent.
C. 8 percent.
D. 2 percent.
Answer: A
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Suppose Country X is relatively labor-abundant and relatively land-scarce. Country Y is relatively labor-scarce and relatively land-abundant. The production of corn is relatively land-intensive while the production of shoes is relatively labor-intensive. Explain the short- and long-run effects of opening to free trade between these countries on the incomes of: workers employed in the production of corn in each country; workers employed in the production of shoes in each country; land used in the production of corn in each country; and land used in the production of shoes in each country.
What will be an ideal response?
The figure below represents the effects in the labor markets due to migration. Here, the world has been divided into a high-income "North" (left panel) and a low-income "South" (right panel). Dn and Sn are the labor demand and the labor supply curves in North. Ds and (Sr + Smig) are the labor demand and pre-migration labor supply curves in South. Sr is the post-migration labor supply curve in South. The value c is the cost of migrating.
As a result of migration, the employers in North
A. gain $162.5 million. B. lose $131.25 million. C. lose $100 million. D. gain $31.25 million.
With a linear inverse demand function and the same constant marginal costs for both firms in a homogeneous product Stackelberg duopoly, which of the following will result?
A. QL = 2QF. B. Profits of leader > Profits of follower. C. Profits of leader > Profits of follower and QL = 2QF. D. PL > PF.
Which statement is correct?
A. During a recession spending on capital goods increases. B. The production of nondurable consumer goods is more stable than the production of durable consumer goods over the business cycle. C. Recessions have not been severe because economists and statisticians have been able to predict their occurrence and intensity with high accuracy. D. Real output and employment usually show little variance over the business cycle.