According to the quantity theory of money, if an economy produces 5,000 units of output, its money supply equals $40,000 and the velocity of money equals one, then the price level will equal:
A. $0.13.
B. $1.25.
C. $8.
D. $200.
Answer: C
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If the interest rate on saving is 5 percent per period, then the true opportunity cost of being paid $100 next period instead of this period is
A. $5. B. $105. C. less than $5 if people suffer from a “defective telescopic faculty.” D. more than $5 if people suffer from a “defective telescopic faculty.”
Which of the following tends to make the size of a shift in aggregate demand resulting from an increase in government purchases smaller than it otherwise would be?
a. the multiplier effect b. the crowding-out effect c. the accelerator effect d. All of the above are correct.
Medicare covers all those
A. who are both young and poor. B. unable to pay its premiums. C. over 65. D. eligible for Social Security benefits.
If the quantity of bonds demanded exceeds the quantity of bonds supplied, bond prices:
A. will rise and yields would increase. B. would fall and yields would increase. C. will rise and yields will remain constant. D. would rise and yields would fall.