Economists observed the following growth rates in the fourth quarter of 1995: real GDP = 2.8 percent; M1 = 7.8 percent; GDP Deflator = 2.2 percent. Given this data, the growth of velocity was approximately
a. ?7.8 percent.
b. ?5.0 percent.
c. ?2.8 percent.
d. ?2.2 percent.
e. ?2.0 percent.
c
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The interest rate that the Fed charges on loans made directly to banks is called ________.
A. the prime rate B. the discount rate C. interest on reserves D. the federal funds rate
A firm in a competitive industry faces the following short-run cost and revenue conditions: ATC = $16; AVC = $8; and MR = MC = $12. This firm should
A) expand production and keep price constant. B) decrease production and raise its price. C) shut down. D) continue to operate at the same price and output level in the short run.
A group of countries that allows free trade among its members and puts up common barriers against all other countries' goods is called:
A. an autarky. B. a tariff-free zone. C. a most-favored-nation agreement. D. a free trade association.
Suppose that the normal rate of return in the inkjet printer industry is 10% and the return being earned by firms in this industry equals exactly 5%. Which of the following is likely to follow from this scenario?
A. The normal rate of return will fall to 5% in the long run. B. Firms will want to leave the industry. C. New firms will want to enter the industry. D. Firms will collude to keep competition out.