If the economy is operating at full employment and there is a substantial increase in the money supply, the quantity theory of money predicts an increase in
(a) the velocity of money
(b) real output
(c) interest rates
(d) unemployment
(e) the price level
Answer: (e) the price level
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The additional revenue earned from hiring one more worker is known as the
A) marginal physical product of labor. B) marginal revenue product of labor. C) marginal factor cost of labor. D) marginal utility of labor.
Suppose an American worker can make 100 chairs or catch 1000 fish per day. On the other hand, a Chilean worker can produce 40 chairs or catch 400 fish per day. The United States possesses a(n) _______________ advantage in chair production, but not a(n) ______________ advantage in fish production.
A. absolute; comparative B. comparative; absolute C. absolute; absolute D. comparative; comparative
The federal budget surplus recorded in 1998 resulted from a(n): a. decrease in taxes and rapid growth in federal outlays. b. increase in taxes and sluggish growth in federal outlays. c. decrease in taxes and a decrease in federal outlays
d. increase in federal outlays and taxes. e. increase in export earnings and decrease in import bills.
If rational expectations are assumed, inflation can be reduced with no corresponding increase in unemployment
a. True b. False Indicate whether the statement is true or false