"The velocity of circulation is the average speed with which money is loaned to businesses and households." Is the previous statement correct or incorrect?
What will be an ideal response?
The statement is incorrect. The velocity of circulation is the average number of times in a year that each dollar of money is used to purchase final goods and services.
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Which one of the following is not a possible limitation of using the Coase theorem to guide environmental policy?
a. The free rider effect b. Poor communities are likely to bear a high proportion of environmental costs c. Voluntary transactions cannot protect the environment d. Transactions costs are likely to be high when many parties are involved
A business doubled the price of a product in order to increase profits. Which of the following scenarios might have occurred?
a. A sharp increase in revenues demonstrated the elasticity of the product. b. A dramatic decline in revenues demonstrated the elasticity of the product. c. A dramatic decline in revenues demonstrated the inelasticity of the product. d. A small increase in revenues demonstrated the unit elasticity of the product.