According to the classical model, both prices and nominal income would double if the quantity of money
a) doubled.
b) remained constant.
c) tripled.
d) halved.
Answer: a) doubled.
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Current estimates of the marginal propensity to consume out of wealth are in the neighborhood of ________
A) three and one-half cents per dollar of wealth B) 45 cents per dollar of wealth C) 98 cents per dollar of wealth D) $4.87 per dollar of wealth
Suppose you observed firms' inventory stocks drop by $100 billion. If you knew that aggregate expenditure was $3,000 billion, what would GDP be?
a. $3,000 billion b. $2,000 billion c. $2,900 billion d. $1,000 billion e. $3,100 billion
If P = MC for all goods in a free-market economy, then
a. the desire for utility maximization will lead consumers to buy the amount of each good at which MU = MC. b. the desire for profit maximization will lead consumers to buy the amount of each good at which MU = MC. c. the desire for utility maximization will lead consumers to buy only those goods that have low opportunity costs. d. the desire for profit maximization will lead all firms to stop producing in the long run (though possibly not in the short run).
Microeconomics is the study of how households and firms make decisions and how they interact in specific markets
a. True b. False Indicate whether the statement is true or false