When a firm hires labor up to the point where the wage is equal to the value of the marginal product of labor, it is
a. minimizing labor costs.
b. guaranteeing that labor costs do not exceed fixed costs.
c. maximizing the number of workers it can hire and still experience a positive profit.
d. maximizing profit.
d
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Changes in a currency's exchange rate adjust immediately to insure that
A) official settlements account parity always prevails. B) net exports always equal zero. C) interest rate parity always prevails. D) current account balance equals zero. E) purchasing power parity always prevails.
If nominal GDP is $10 trillion, and velocity is 10, the money supply is
A) $1 trillion. B) $5 trillion. C) $10 trillion. D) $100 trillion.
If an economy is growing, but experiences no inflation, this means
a. aggregate demand increased, but aggregate supply did not. b. aggregate supply decreased, but aggregate demand did not. c. aggregate demand and aggregate supply increased by the same amount. d. aggregate demand and aggregate supply decreased by the same amount.
Figure 30-3. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes.
