The quantity theory of inflation indicates that the inflation rate equals
A) the growth rate of the money supply minus the growth rate of aggregate output.
B) the level of the money supply minus the level of aggregate output.
C) the growth rate of the money supply plus the growth rate of aggregate output.
D) the level of the money supply plus the level of aggregate output.
A
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The proponents of rational expectations and monetarism think that the Federal Reserve should adopt
A) a constant monetary growth rule. B) an interest rate target. C) a monetary aggregate target. D) an inflation target.
Which of the following coordinates the choices of buyers and sellers, bringing quantity demanded and quantity supplied into balance?
a. government mandates b. the market price c. taxes and subsidies d. consumer demand
If firms seek an average markup of 25% over labor costs, and this is consistent with labor demands at the natural rate, then in the long run
a) real wages will be 25% of the price level b) prices will be 4 times greater than wages c) wages will rise 80 cents for every $1 increase in prices d) wages will fall 25 cents for every $1 increase in prices e) prices will rise 25 cents for every $1 increase in wages
When the U.S. housing market crashed, it caused all of the following except:
A. all sellers of real estate to profit when selling their house. B. lenders to stop lending. C. the U.S. economy to tip into the Great Recession. D. banks to go bust due people not paying their mortgages.