According to the equation of exchange, total spending will rise if the money supply decreases and velocity is stable.
Answer the following statement true (T) or false (F)
False
The equation of exchange (MV=PQ) shows that a drop in the money supply, when velocity is constant, will cause prices and/or the level of output to fall.
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The Mayor of Stuckeyville is considering increasing the tax on bowling. He is confident that tax revenues will increase but recognizes the possibility that they may decrease. The mayor is engaging in
A) dynamic tax analysis. B) static tax analysis. C) a policy that will cause the tax base to increase. D) a policy that will cause the tax base to remain unchanged.
An important assumption in the theory of public choice is that
A) individuals will act within the political process to maximize their individual well-being. B) individuals will act within the political process to maximize their collective well-being. C) individuals will only operate outside the political process when their well-being is involved. D) scarcity does not exist in the government sector.
The Lorenz curve maps:
A. the cumulative percentage of the population against the cumulative percentage of income earned by those people. B. each quintile of the population in order of income-earned against the average income earned by those people. C. GDP per capita against what people really earn by quintile. D. None of these describes what the Lorenz curve maps.
Suppose there was a debate regarding how to spend $1 billion in newly found revenues in the budget. Suppose the centrist Democrat suggests an increase to infrastructure spending. Suppose the centrist Republican suggests an increase in cyber-defense spending. The Democrat says that, on average, infrastructure spending does the most good, so more is better. The Republican is arguing that the extra cyber-security purchased by the extra spending will increase well-being the most. What is going on here?
A. Both are employing marginal analysis, just from different perspectives. B. Only the Republican is using marginal analysis. C. Neither are using marginal analysis. D. Only the Democrat is using marginal analysis.