Since classical economists believe that both V and Q are constants for an economy in short-run equilibrium, the equation of exchange becomes a theory in which:
A. the quantity of money explains prices.
B. the quantity of money explains velocity.
C. the quantity of money explains real GDP.
D. changes in M cause changes in V.
Answer: A
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In stores, it is common to find seasonal products marked down when the season ends. What explains this behavior?
A) The store is trying to increase its customers' demand for the product. B) The store manager must be trying to drive away customers by selling low quality products. C) The store is trying to sell the goods and realizes that they are substitutes for other goods whose prices have risen. D) The law of demand is being used to increase the quantity demanded. E) The store is trying to increase its consumers' incomes by increasing their purchasing power.
Indifference curves that are closest to the origin are preferable to ones that are farther from the origin
a. True b. False Indicate whether the statement is true or false
If the marginal propensity to consume (MPC) is 0.75, the value of the spending multiplier is:
a. 0. b. 1. c. 4. d. 5.
In order to maximize profits in the short run, a firm should produce where
a. marginal revenue exceeds marginal cost by the greatest amount. b. marginal cost is minimized. c. average total cost is minimized. d. marginal cost equals marginal revenue.