The rules-based monetary policy reads: The annual growth rate in the money supply will be equal to the average annual growth rate in Real GDP minus the growth rate in velocity. If the average growth rate in Real GDP this year is 3 percent and the growth rate in velocity is 2 percent, then the money supply will increase by ______________ percent this year
A) 1
B) 2
C) 3
D) 4
A
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The larger the MPS, the smaller the value of the multiplier
Indicate whether the statement is true or false
Many governments actively work to:
A. attract foreign direct investment, hoping it will build up their capital stock when domestic savings aren't sufficient. B. attract foreign direct investment, so that when foreign companies invest in local firms, they can transfer human capital to local managers. C. discourage foreign direct investment, in an effort to encourage locals to invest in their own economy. D. discourage foreign direct investment, in an effort to avoid "crowding out."
What accounts for specialization?
a. People specialize in the activity in which their opportunity costs are at a maximum. b. People specialize in the activity in which their opportunity costs are lowest. c. People do not specialize in any activity. d. People specialize in the activity that pays the highest wage. e. People specialize in the activity that they enjoy the most, no matter what the salary is.
The concept that suggests the consumption of the first few units of any good tends to bring a higher level of utility to a person than consumption of later units is the:
a. law of diminishing marginal utility. b. law of supply. c. law of demand. d. law of consumption.