The quantity theory of money:
A) assumes that the ratio of money supply to nominal GDP decreases over time.
B) assumes that the ratio of money supply to nominal GDP increases over time.
C) is a representation of how a change in money supply affects the price level in an economy.
D) is an exact representation of how the economy behaves in the long-run.
C
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A monopolistically competitive firm is making a positive economic profit. In the long run, which of the following is most likely?
A) It will produce less output and it will charge a lower price. B) It will produce the same output and charge the same price. C) It will produce less output but keep price the same. D) It will keep output the same but will charge a higher price.
A price ceiling is binding when
a. the government sets price above market equilibrium price. b. the equivalent of an implicit tax on producers and an implicit subsidy to consumers. c. the government sets price below market equilibrium price. d. Both b and c.