Suppose agricultural technology results in increased grain yield for U.S. farmers. The increased supply of grain will drive down grain prices. Because the demand for grain is price elastic, lower prices will result in lower total farm revenue
Indicate whether the statement is true or false
false
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Which of the following is a limitation of using arithmetic averages to calculate growth rates?
A) Arithmetic averages do not capture the exponential nature of growth and thus are not apt for long-run prediction. B) Arithmetic averages cannot be used in case of negative growth. C) Arithmetic averages are difficult to calculate. D) The calculation of growth using arithmetic averages requires more data than other methods.
Suppose the economy's production function is Y = AK0.3N0.7. If K = 2000, N = 100, and A = 1, then Y = 246. If K and N both rise by 20%, and A is unchanged, by how much does Y increase?
A) 5% B) 10% C) 15% D) 20%
If the government wishes to increase GDP by $1,200b, and the MPC is 0.8, it should:
A. increase its spending by $240b. B. decrease its spending by $240b. C. increase its spending by $960b. D. decrease its spending by $960b.
What assumptions are necessary to argue that the quantity equation implies that increases in the money supply lead to proportional changes in the price level?