The equation Y = f(P - Pe) represents the
A. income velocity of money.
B. Lucas supply function.
C. Keynesian consumption function.
D. equation of exchange.
Answer: B
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Imagine that an economy produces two goods, flashlights and fishing lures. In 2015, the economy produced 100 flashlights and 50 fishing lures, and the prices of flashlights and fishing lures were $5 and $11, respectively
In 2016, the economy produced 120 flashlights and 60 fishing lures, and the prices of flashlights and fishing lures were $7 and $14, respectively. respectively. What happened to nominal GDP from 2015 to 2016? What happened to real GDP?
Suppose that Jones builds a new house, then she sells it to Smith, and then Smith sells it to Williams. The total net investment from these transactions is:
A. zero. B. 1 house. C. 2 houses. D. 3 houses.
The formula for an infinite sum is:
A. 1 + b + b2 + b3 + b4 + ... = 1 / b. B. 1 + b + b2 + b3 + b4 + ... = 1 / (1 + b). C. 1 + b + b2 + b3 + b4 + ... = 1 / (1 - b). D. 1 + b + b2 + b3 + b4 + ... = b / (1 - b).
Suppose domestic investment increases, and there is no change in the amount of domestic private and public saving. Using the national savings and investment identity, show what happens to the size of the trade deficit.
What will be an ideal response?