The quantity theory of money and prices asserts that
A. increases in the money supply lead to a decrease in the velocity of money.
B. increases in the money supply lead to an increase in the velocity of money.
C. increases in the money supply lead to inflation.
D. increases in the money supply will increase real GDP.
Answer: C
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To maximize profit, a perfectly competitive firm that decides not to shut down will choose the rate of output at which
a. price is highest b. price minus average total cost is maximized c. price equals marginal cost d. total revenue is maximized e. average total cost is minimized
Soft budget constraints will lead to
a. inefficiency b. quick responses to changes in supply and demand c. good investment decisions d. high product quality e. managers eager to satisfy consumer demand rather than production quotas
One of the successes of the European Union (EU) is that banks have "passporting rights," which means that
A. banks in the EU are not required to follow the policies of a central monetary authority. B. banks in the EU can sell financial services to any EU country without regulatory barriers. C. banks in the EU have the authority to issue EU passports and travel visas to any citizen of a member country. D. banks in the EU have unlimited access to foreign financial capital.
Refer to Table 4-4. If a minimum wage of $10.00 is mandated there will be a
A) shortage of 20,000 units of labor. B) surplus of 40,000 units of labor. C) shortage of 40,000 units of labor. D) surplus of 20,000 units of labor.