Which of the following is consistent with the monetarist view?
A. Changes in M may cause changes in V and Q in the long run.
B. A reduction in taxes will leave the value of real output unaffected.
C. Prices may be affected by increases in G or reductions in T.
D. Monetary policy should be used to correct a shortfall in aggregate demand.
Answer: B
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The figure above shows the market for pants. If the production of the pants results in an external cost from pollution that is the result of the dye used, then
A) 6 million pairs is the efficient quantity. B) fewer than 6 million pairs is the efficient quantity. C) more than 6 million pairs is the efficient quantity. D) None of the above answers is necessarily correct because more information is needed about the size of the external cost. E) None of the above answers is correct because it is impossible to tell whether the external cost results in underproduction or overproduction.
Which of the following statements about the nominal and the real wage rates is correct?
A) The nominal wage rate equals the real wage rate divided by the CPI and then multiplied by 100. B) The nominal wage rate is measured in the dollars of a base year. C) The real wage rate is measured in current year dollars. D) The real wage rate indicates how many goods and services can be purchased with an hour's labor. E) The real wage rate equals the nominal wage rate multiplied by the CPI then divided by 100.