If real income rises 4%, prices rise 1%, and nominal money demand rises 4%, what is the income elasticity of real money demand?
A. 3/4
B. 4/5
C. 1
D. 5/6
Answer: A
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In the simple aggregate expenditure model, the slope of the aggregate expenditure line depends on: a. interest rates
b. real gross domestic product. c. the price level. d. the marginal propensity to consume. e. the marginal propensity to save.
If the government thinks the price that a consumer has to pay for a good is too high, then which of the following would solve this problem?
a. a price ceiling or an excise tax b. a price floor or an excise tax c. a price ceiling or a subsidy d. a price floor or a subsidy e. none of the above will lower the price a consumer has to pay for a good
Gresham's Law states that:
a. Good money tends to drive bad money out of circulation. b. Virtual and electronic money tends to drive physical money out of circulation. c. Bad money tends to drive good money circulation. c. In times of financial instability, nations should "gresham," which means to back their currencies by precious metals. d. In times of financial instability, commodity-backed money tends to drive electronic and virtual currencies from circulation.
Price indexes are necessary for turning a time series measured in real value into nominal value.
Answer the following statement true (T) or false (F)