Suppose that velocity rises while the money supply stays the same. It follows that
a. P x Y must rise.
b. P x Y must fall.
c. P x Y must be unchanged.
d. the effects on P x Y are uncertain.
a
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The principal of optimization at the margin states that:
A) moving toward the optimal alternative makes the decision maker worse off, and moving away from it, makes the decision maker better off. B) an optimal alternative has the lowest indirect costs in comparison to other feasible alternatives. C) an optimal alternative has the highest net benefits in comparison to other feasible alternatives. D) moving toward the optimal alternative makes the decision maker better off, and moving away from it makes him worse off. Assume that there are five apartments located at different distances from an individual's place of work: very close, close, far, very far, and extremely far. The individual makes his choice by studying the change in costs as he moves farther from his place of work. She has to choose between renting one of the five apartments. The movement from apartment Very Close to Close has a marginal cost of -$60, a movement from apartment Close to Far has a marginal cost of -$40, a movement from apartment Far to Very Far has a marginal cost of -$10, and a movement from apartment Very Far to Extremely Far has a marginal cost of $20.
There is a difference between who is legally required to send a tax payment to the government and who bears the burden of the tax. Which of the following would have the most impact on who bears the burden of an excise tax?
A) The elasticity of demand for the item that is taxed. B) whether the tax is based on the ability-to-pay principle or the benefits-received principle C) whether the tax is imposed by the federal government or a state government D) The motive for the tax. If the tax is designed to raise revenue, more of the burden will fall on firms. If the tax is designed to achieve a social objective (for example, to discourage smoking) more of the burden will fall on consumers.
Externalities exist because
A) private costs differ from social costs. B) private costs are equal to social costs. C) government has created them. D) they are a function of socialism.
If we know that the slope of the consumption function is 0.6, then we know that if real disposable income increased by $1,000 billion, real consumption spending would
a. increase by $60 billion b. increase by $1,000 billion c. increase by $600 billion d. increase by $6,000 billion e. decrease by $6 billion