Using the cash balance version of the quantity theory with k = .2, an increase in the money supply of $100 billion leads to an increase in GDP of
A) $500 billion.
B) $100 billion.
C) $50 billion.
D) $20 billion.
A
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Lower rates of inflation increase planned spending because:
A. the reduction in wealth, resulting from the reduced real value of money, restrains spending. B. the Fed reacts to the lower inflation by lowering interest rates. C. resources are redistributed from high-spending households to low-spending households. D. the prices of domestic goods sold abroad increase (with a constant exchange rate).
Use the following graph of the bicycle market to answer the question below.
S1 and D1 are the original supply and demand curves. D2 and D3 and S2 and S3 are possible new demand and supply curves. Starting from the initial equilibrium (point 1), which point on the graph is most likely to be the new equilibrium after an increase in wages of bicycle workers and a significant increase in the price of gasoline?
A. 4 B. 3 C. 5 D. 6
Individual economic decisions are coordinated by
A) markets through adjustments in sales levels. B) markets through adjustments in prices. C) government through adjustments in sales taxes. D) government through adjustments in income taxes.
What other curve is the same as the market supply curve? Why are the curves the same?
What will be an ideal response?