The major difference between the quantity theory of money (QTM) and the equation of exchange (EOE) is:
a. QTM deals with different macroeconomic variables than EOE.
b. EOE is a tautology and QTM is a theory.
c. EOE is a theory, and QTM is a tautology.
d. There is no difference between QTM and EOE. They are both basically looking at the same variables in the same way. One approach is monetarist and the other is Keynesian.
e. EOE is a stock concept, and QTM is a flow concept.
.B
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The more excess reserves banks choose to keep
A) the lower the required reserve ratio. B) the smaller the deposit multiplier. C) the larger the deposit multiplier. D) the higher the required reserve ratio.
In the Heckscher-Ohlin model, when two countries begin to trade with each other
A) the relative prices of traded goods in the two countries converge. B) relative factor prices in the two countries diverge. C) benefits from trade are evenly distributed between the two countries. D) all factors in both countries will gain from trade. E) all factors in one country will gain, but there may be no gains in the other country.
Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. If Jack only cares about expected value, and not risk, he should decide to play a game if:
A. the expected value of the payoff is higher than the price to play the game. B. the expected value of the payoff is lower than the price to play the game. C. the expected value of the payoff is higher than the expected value of the payoff in the other game. D. the expected value of the payoff is double the price to play the game.
Beginning from full-employment macro equilibrium, increase in government spending will cause real GDP to: a. increase in the short run. b. decline in the long run
c. decline in the short run. d. increase in the long run.