Key assumptions behind the quantity theory of money include:
A. the change in nominal GDP is zero.
B. the money supply is fixed.
C. the percentage change in the price level equals the percentage change in real GDP.
D. the velocity of money is constant.
Answer: D
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Why do economists tend to create models in diagrammatic form?
A. Diagrams distort reality, and theory is an attempt to avoid reality. B. Because they are unable to construct physical models of their theories. C. Economic reality can only be represented in diagrams. D. Most economists like to draw as much as possible. E. All of these responses are correct.
Government in the United States spends more as a percentage of GDP than in most other industrialized nations.
Answer the following statement true (T) or false (F)
The economic way of thinking would approach the question "Is this industry competitive?" by
A) counting the number of firms in the industry. B) comparing the ratio of prices to costs across the industry. C) assessing the freedom of entry into the industry. D) evaluating the actual structure of the industry to the competitive standards articulated in antitrust legislation.
Property and casualty insurance companies are organized
A) both as stock and mutual companies. B) only as stock companies. C) only as mutual companies. D) primarily as cooperatives.