If the nominal money supply grows 6%, real income rises 2%, and the inflation rate is 5%, then the income elasticity of money demand is
A) 0.5.
B) 0.75.
C) 1.0.
D) 1.5.
A
You might also like to view...
In the Keynesian model in the long run, an increase in taxes causes the price level to ________ and the real interest rate to ________
A) fall; rise B) fall; fall C) rise; rise D) rise; fall
In general, supply curves slope upward because:
a. increases in the price of a good result in lower opportunity costs. b. rising prices provide producers with a greater profit incentive. c. consumers buy a greater quantity. d. technology improves the ability of firms to produce more at each possible price.
According to behavioral economists, someone suffering from myopia is most likely to:
A. spend too little on present consumption and save more than is necessary for the future. B. vote only for economic policies that serve his or her short- and long-term interests. C. rely too much on System 2 of the brain. D. spend too much on present consumption and not save enough for the future.
If average variable costs are increasing while average total costs are decreasing, then
A. fixed costs must be zero. B. marginal cost must lie between average variable and average total costs. C. marginal cost must equal average variable cost. D. marginal cost must equal average total cost.