During the sixteenth century, Spanish conquistadors like Hernando Cortes overwhelmed the Aztecs and other indigenous peoples in America by pillaging their cities, and taking their gold and silver. The gold and silver was sent back to Spain, causing its
money supply to increase tenfold. Assuming V remained stable and Q increased slightly, what do you think happened to prices in Spain during this period?
According to the equation of exchange, if M greatly increases while V and Q don't change very much, the price level (P) will rise. That's what happened. Spain experienced rapid inflation. In fact, prices rose all over Europe, especially near trading centers, as the new money was sent.
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The law of demand states that there is a negative relationship between price and quantity demanded, ceteris paribus
Indicate whether the statement is true or false
The marginal propensity to save is
a. the change in saving divided by the change in income b. the change in income divided by the change in saving c. saving divided by income d. income divided by saving e. saving divided by consumption
Stagflation means a
A. low rate of inflation coupled with a rate of unemployment below the natural rate. B. low rate of inflation coupled with a very high rate of unemployment. C. high rate of inflation coupled with a very low rate of unemployment. D. high rate of inflation coupled with a high rate of unemployment.
If the price of the product produced by labor decreases, the marginal revenue product of labor curve will
A. become more inelastic. B. shift to the left. C. shift to the right. D. be unaffected because productivity of labor has not changed.