According to the equation of exchange, an increase in either velocity or the money supply will
a. cause PQ to rise.
b. not affect the price level.
c. cause the price level to fall.
d. cause PQ to fall.
a. cause PQ to rise.
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The cross elasticity of demand between Coca-Cola and Pepsi-Cola is ________ so that Coke and Pepsi are ________
A) positive; complements B) positive; substitutes C) negative; normal goods D) negative; substitutes
Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. Suppose Kate enters the market first and chooses her output before Alice. What is Kate's profit?
A. $10,000 B. $5,000 C. $20,000 D. $15,000
How can the demand for one good be affected by increased demand for another one?
(A) When goods are bought together, increased demand for one will decrease demand for the other. (B) A drop in price for a good will increase demand for the good and its substitute. (C) If goods are used together, increased demand for one will increase demand for the other. (D) If goods are substitutes for each other, increased demand for one will increase demand for the other.
A bank that is liquid:
A. has assets that can be readily converted into cash and money. B. is diversified in its holdings of financial assets. C. can sell short-term bonds to buy long-term bonds. D. has sufficient assets to cover its long-term liabilities.