Which of the following is NOT a component of the equation of exchange?
A. The price level
B. The interest rate
C. Real output
D. The velocity of money
B. The interest rate
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If insurance is available on an activity:
A) more of that activity will occur B) less of that activity will occur C) investors will be less likely to hedge D) it increases the risk of engaging in that activity
The conventional fiscal policy to fight inflation would be to
A. increase the rate of monetary growth. B. decrease the rate of monetary growth. C. run a government surplus. D. run a government deficit.
A permanent increase of borrowing by the U.S. Treasury to finance growing budget deficits will:
A. result in U.S. Treasury yields being higher than high-grade corporate bonds. B. result in lower yields on corporate bonds. C. cause the yield on U.S. Treasury bonds to increase, but still be lower than corporate bonds. D. result in the price of U.S. Treasury bonds rising.
A major reason that firms form a cartel is to:
A. Reduce the elasticity of demand for the product B. Enlarge the market share for each producer C. Minimize the costs of production D. Maximize joint profits