When the consumer spends a small portion of his income on a good, demand will be

Which of the following predictions can be made using the growth rates associated with the quantity equation, assuming velocity is stable?

A) If the money supply grows at a faster rate than real GDP, there will be inflation. B) If the money supply grows at a slower rate than real GDP, there will be inflation. C) If the money supply grows at the same rate as real GDP, the price level will be fall and there will be deflation. D) If the money supply grows at the same rate as real GDP, the price level will also increase at the same rate as real GDP.

Refer to Figure 5-4. What does S1 represent?

A) the market supply curve that reflects private cost B) the market supply curve that reflects only private benefit C) the market supply curve that reflects only external cost D) the market supply curve that reflects social cost