When demand deposits increase, M1 and M2 increase
a. true
b. false
Answer: a. true
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When a good is excludable:
A. one person's consumption prevents or decreases others' ability to consume it. B. it is possible for sellers to prevent its use by those who have not paid for it. C. consumers have a perception of scarcity of that good. D. the government has specific import policies limiting its supply.
According to rational expectations theory: a. a large reduction in unemployment can be achieved with a relatively small increase in inflation
b. people are not easily fooled by changes in government fiscal policy. c. inflation rates that rise 3 percentage points each year will keep unemployment below its natural rate for a sustained period of time. d. the Phillips curve will slope downward to the right, if people correctly anticipate the inflation rate.
When the selling price of a good goes up, what is the relationship to the quantity supplied?
a) the cost of production goes down b) The profit made on each item goes down c) It becomes practical to produce more goods d) There is no relationship between the two
Based on the graph showing the run-up of nominal home prices, if a person had wanted to buy a house, hold it for five years, and then sell it for a profit, which of the following years would have been the best to make the purchase in?
a. 1899
b. 1941
c. 1984
d. 2001