Using the equation of exchange, if inflation is 1.5%, real output grows by 3.0%, and the growth rate of money is 5.0%, the change in the velocity of money is:
A. +4.5%.
B. -0.5%.
C. +0.5%.
D. Zero; velocity is constant.
Answer: B
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An economy is experiencing a recessionary gap. The government can ________.
Fill in the blank(s) with the appropriate word(s).
In the United States, the idea that the federal government should undertake actions to stabilize business activity
A) was established in the Declaration of Independence. B) is a relatively new idea that developed in the years during and after the Great Depression. C) has been around since the early 1700s. D) developed during World War I.
With respect to the market clearing price and the equilibrium quantity of good A, increases in the demand for and the supply of good A will definitely
A. increase the equilibrium quantity of good A but have an uncertain impact on the market clearing price of A. B. increase the market clearing price and the equilibrium quantity of good A. C. reduce the market clearing price and the equilibrium quantity of good A. D. increase the market clearing price of good A but have an uncertain impact on the equilibrium quantity of A.
The demand curve for the product of a perfectly competitive firm is
A) downward sloping. B) upward sloping. C) perfectly inelastic. D) perfectly elastic.