Euler's theorem implies that if a production function exhibits constant returns to scale, then:
A. economic profit is zero.
B. accounting profit is zero.
C. the marginal product of labour equals the real wage.
D. the marginal product of capital equals the real interest rate.
Ans: A. economic profit is zero.
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If the velocity of the M1 money supply is 4 and nominal GDP is $200 billion, the stock of money in circulation must be:
a. $25 billion. b. $50 billion. c. $100 billion. d. $800 billion.
For which of the following would purchasing power parity have the least relevance?
a. Pens b. Toothpicks c. Paper clips d. Pencils e. Shoe shines
In the IS-LM-PC model, LM curve is
A) flat. B) upward sloping. C) downward sloping. D) vertical.
Saving is
A. the difference between real GDP and disposable income while savings is the difference between disposable income and consumption spending. B. the difference between disposable income and spending on goods and services while savings is the difference between real GDP and disposable income. C. the amount one does not consume in a given period of time while savings is the accumulation of past periods of saving. D. the accumulation of past periods of savings while savings is the amount of disposable income that is not consumed in a given period of time.