In the equation of exchange, PQ represents:
a. the dollar value of all final goods and services sold in a country in a given year.
b. the price index times nominal GDP

According to the Taylor Rule, for a given inflation rate, ________

A) every percentage point increase in the inflation rate increases the federal funds rate by 1.5 percentage points B) if bank reserves double, the federal funds rate should double C) every percentage point increase in the nominal interest rate increases the federal funds rate by 1 percentage point D) if nominal output doubles, the federal funds rate should double

Refer to Scenario 4 . Assume that the state originally spent one-half of its budget on schools and one-half on prisons

What was the production of schools and prisons? Could the same number be achieved after the price of producing prisons falls to $1.5 million and the price of producing schools rises to $2 million? Explain.