The quantity theory of money implies that a 3% increase in the money supply will eventually cause
A. a 3% decrease in the unemployment rate.
B. a 3% increase in disposable income.
C. a 3% increase in real GDP.
D. a 3% increase in the price level.
Answer: D
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If an economy is operating inefficiently, then
a. the economy can increase production of consumption goods without reducing capital goods. b. there is always a positive opportunity cost to increasing output. c. output can only be increased through capital investment. d. output cannot be increased.
When the United States imposed a tariff on imported shrimp, a Vietnamese official said: "If the tariffs are imposed, that will mean fewer shrimp for the U.S. market and higher prices for consumers. So the U.S. government position hurts its own people. That's irrational." The imposition of tariffs by the United States in this case illustrates:
A. the good/bad paradox that what is good economics is always bad politics and vice versa. B. that U.S. consumers are either irrational or altruistic because they are willing to pay higher prices to help the U.S. shrimp industry. C. what the text calls the general rule of political economy, which states that often small interest groups lobby better than large groups. D. that the U.S. government, like all governments, is sometimes irrational.
Demand and supply are terms that refer to the behavior of people and firms as they interact in markets.
a. true b. false
_____ when net taxes are reduced.
What will be an ideal response?