According to the quantity theory of money, a 3 percent increase in the money supply
a. causes the price level to rise by 3 percent.
b. causes the price level to rise by less than 3 percent.
c. leaves the price level unchanged.
d. causes the price level to fall by 3 percent.
a
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Suppose a drought increased the price of corn by 25 percent while it decreased the quantity by 50 percent. The price elasticity of demand equals
A) 2.00. B) 0.50. C) 20.0. D) zero.
Suppose you read in the Wall Street Journal that actual investment in Mexico in 2003 was precisely the intended investment Mexican businesses had hoped to make. You would conclude that in 2003, the level of inventories in Mexico
a. had not changed but national income fell b. had not changed and national income was at its equilibrium level c. increased and national income fell d. increased along with national income e. was zero