Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. The demand for potatoes is Q = 10,000/p. If the long-run supply curve is horizontal, then how much will consumers spend, in total, on potatoes?

Suppose that real GDP grows by 3 percent a year, the quantity of money grows 6 percent a year, and velocity grows by 1 percent. In the long run, the inflation rate equals

A) 12 percent. B) 9 percent. C) 10 percent. D) 4 percent. E) 5 percent.

Increases in interest rates

A) reduce borrowers' net worth. B) reduce lenders' net worth. C) increase the present value of borrowers' assets. D) raise the cost to businesses of internal funding.