If government spending decreases, which of the following would occur?
a. An increase in GDP, an increase in the price level, an increase in money demand, and an increase in the interest rate
b. An increase in GDP, a decrease in the price level, an increase in money demand, and a decrease in the interest rate
c. A decrease in GDP, a decrease in the price level, a decrease in money demand, and a decrease in the interest rate
d. A decrease in GDP, a decrease in the price level, an increase in money demand, and an increase in the interest rate
e. An increase in GDP, an increase in the price level, a decrease in money demand, and a decrease in the interest rate.
C
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Moving downward on a downward sloping linear demand curve, the absolute value of the price elasticity of demand
A) is constant. B) increases continuously. C) decreases continuously. D) may either increase or decrease.
Using the quantity equation, if the velocity of money grows at 5 percent, the money supply grows at 10 percent, and real GDP grows at 4 percent, then the inflation rate will be
A) 19 percent. B) 15 percent. C) 11 percent. D) 6 percent.