Answer the following statements true (T) or false (F)
1. An increase in the money supply always causes an increase in the price level.
2. The effect of a change in the money supply on economic activity may be offset by a change in velocity.
3. An increase in the velocity of money can have an effect similar to that of an increase in the money supply.
4. A government surplus may trigger a decline in the money supply.
5. If the CPI reads 150, prices have increased 50 percent since the base year.
1. FALSE
2. TRUE
3. TRUE
4. TRUE
5. TRUE
You might also like to view...
The tax approach may be favorable over a direct controls approach to pollution cleanup because
A. all firms face identical costs. B. large firms are the most likely to reduce their pollution and therefore, have the greatest impact. C. small firms are most likely to reduce their pollution since they are most efficient at it. D. firms that have the ability to reduce pollution at the lowest cost do so, while others do not.
In Figure 3-6, suppose D1 and S1 indicate initial conditions in the market for ice cream. Which of the following changes would tend to cause a shift from S1 to S2 in the market for ice cream?
a. an increase in the price of sugar, an ingredient used to produce ice cream b. a decrease in the price of frozen yogurt, a substitute for ice cream c. abnormally hot weather that temporarily increases consumer desire for ice cream d. a decrease in the price of milk, an ingredient used to produce ice cream
The strong appreciation of the dollar for the last part of the 1990s:
A. played a key role in keeping inflation in check even though the economy was growing rapidly. B. was a benefit to all U.S. residents but costly to most foreign producers. C. was a benefit to U.S. exporters, but put a severe strain on U.S. Importers. D. was welcomed by all U.S. manufacturers.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease