By saying that the equation of exchange is an accounting identity, we mean that
A) it is useful for accountants, but not for economists.
B) it identifies the key national income accounts.
C) it is always true.
D) it explains the effect of questionable accounting practices on macroeconomic performance.
C
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A possible advantage of a horizontal merger for the economy is that
A) the government stands to collect more corporate income tax revenue. B) the merged firm might reap economies of scale which could translate into lower prices. C) the merging firms could avoid losses. D) the degree of competition in the industry will be intensified.
When the economy suffers a permanent negative supply shock and the central bank responds by changing the autonomous component of monetary policy to keep inflation at the target inflation rate, then
A) aggregate demand curve shifts leftward. B) aggregate demand curve shifts rightward. C) output will be unchanged. D) both A and C.