Using the equation of exchange, what is nominal GDP if the money supply is $5 trillion and the velocity of money is 4?
a) $10 trillion
b) $20 trillion
c) $30 trillion
d) $40 trillion
Ans: b) $20 trillion
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For a natural monopoly to cover its total cost, its price must equal its
A) average total cost. B) marginal cost. C) demand. D) total fixed cost. E) marginal revenue.
Traditional Keynesians tend to favor
a. monetary policy over fiscal policy because of the effectiveness of central banks. b. monetary policy over fiscal policy because it reduces interest rates.. c. fiscal policy over monetary policy because it doesn't impact interest rates. d. fiscal policy over monetary policy because of the liquidity trap. e. none of the above.
A firm seeking to maximize economic profits should produce at the output at which
A) total revenue equals total cost. B) marginal revenue equals marginal cost. C) average revenue equals average cost. D) marginal revenue equals average revenue.
In most developed economies, public spending on national defense
a) is the largest component of the government’s budget b) accounts for about 1/3 of GDP c) is less than spending on transfer payments d) cannot be distinguished from infrastructure expenditures in the national accounts e) is financed by a national system of subscriptions