If M2 is four times larger than M1, the velocity of M1 should be:
A. one-fourth of the velocity of M2.
B. equal to four.
C. four times larger than the velocity of M2.
D. equal to the velocity of M2.
Answer: C
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Inflation targeting has been adopted by the central banks of several countries including the European Central Bank
Indicate whether the statement is true or false
The evidence on the potential for input substitution in the service sector suggests that:
A) there may be more opportunities for input substitution than was previously thought, especially in areas such as health care, financial services, and the even the fine arts. B) the traditional view that the potential for input substitution is extremely limited is correct. C) while one or two areas of the service sector may see a small amount of input substitution, most areas will see little or none. D) input substitution will only be feasible so long as the production process requires a relatively small amount of labor to begin with.
The primary factor that caused most economists to lose their faith in the classical approach to macroeconomic policy was
A) the high levels of unemployment that occurred during the Great Depression. B) the presence of both high unemployment and high inflation during the 1970s. C) the theoretical proof that classical ideas were invalid. D) the evidence that classical ideas were useful during economic booms, but not during economic recessions.
If a perfectly competitive industry uses only a small share of the available inputs in a resource market, then the long-run market supply curve for the industry will most likely be: a. vertical
b. horizontal. c. upward sloping. d. downward sloping.