The notion that the annual rate of increase in the money supply should be equal to the potential annual growth rate of real GDP best describes the:
A. Monetary rule
B. Velocity of money
C. Equation of exchange
D. Crowding-out effect
A. Monetary rule
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If the government reduces spending ________
A) the IS curve will shift to the right B) output will increase if interest rates remain fixed C) consumption will increase D) all of the above E) none of the above
The portion of the four-sector circular flow model which shows the flow of funds from savers to borrowers is the:
a. product market. b. factor market. c. savings market. d. financial market.
If the interest rate is 5 percent (0.05) per year, what is the present value of $3,000 to be received two years from now?
a. $2,850.00 b. $3,000.00 c. $2,707.50 d. $2,721.09 e. $2,857.14
Which of the following is true of exchange?
a. Exchange is a zero sum activity; if one party gains, the other must lose an equal amount. b. The exchange value of a good is determined by the cost of the resources required to produce the good. c. The total output that trading partners are able to produce is not influenced by whether they trade with each other. d. Exchange permits trading partners to expand their total output of goods and services as the result of greater specialization in areas where each has a comparative advantage.