According to the quantity theory of money,
a) the quantity of money determines the long run equilibrium price level
b) the amount of money in the economy determines the long run quantity of output
c) money affects the aggregate supply curve, while the aggregate demand curve determines real output
d) the money supply only affects the economy in the long run, not in the short run
e) the full-capacity level of output determines the supply of money needed in the economy
a) the quantity of money determines the long run equilibrium price level
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The figure above shows the situation facing Smart Digit, Inc, a firm in monopolistic competition that produces calculators. What is the firm's profit-maximizing price?
A) $12 B) $10 C) $8 D) $4
If the law of diminishing returns applies to labor then
A) the marginal product of labor must eventually become negative. B) the average product of labor must eventually become negative. C) the marginal product of labor must rise and then fall as employment rises. D) the average product of labor must rise and then fall as employment increases. E) after some level of employment, the marginal product of labor must fall.
The use of money for exchange and trade:
A. Increases the importance of barter B. Fosters more specialization in production C. Reduces consumer sovereignty D. Raises the need for a coincidence of wants
Suppose that the percentage change in demand is 10%, the price elasticity of demand is 2, and the price elasticity of supply is 2. The equilibrium price will:
A. decrease by 2.5 percent. B. increase by 40 percent. C. increase by 2.5 percent. D. decrease by 40 percent.