The cash that is counted as part of M1 does not include vault cash
a. True
b. False
A
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A local newspaper headline states "Congress Votes Against President's Proposed Tax Increase." An economist would interpret the statement as
A) a sad event, because all economists favor tax cuts. B) uninteresting, because all economists favor theories instead of reality. C) a purely political issue not related to economics. D) a shorthand way of saying, "More individuals in Congress voted against the tax cut compared to the number of individuals who voted in favor of the tax cut."
Firms in perfectly competitive industries are unable to control the prices of the products they sell and earn a profit in the long run. Which of the following is one reason for this?
A) Firms from other countries are able to produce similar products at lower costs. B) Firms in perfectly competitive industries can use advertising in the short run to persuade consumers that their products are better than those of other firms. But eventually consumers realize that all of the firms sell virtually identical products. C) Firms in these industries sell identical products. D) Owners of perfectly competitive firms realize that their short-run profits are temporary. Therefore, they either sell their businesses or develop other products that will earn short-run profits.
In the Keynesian model with a fixed price level and a fixed money wage, an increase in the money supply will cause
a. output to fall and interest rates to fall. b. output to remain unchanged. c. output to rise and the price level to fall. d. output to rise and interest rates to fall.
If the price of a good is increased and total revenue received from the sale of this good increases, then the price elasticity of demand for the good is
A) elastic. B) inelastic. C) unitary. D) None of the above