In the late 1970s and early 1980s, the velocity of money increased significantly. The main reason(s) for the increase was:
A. the introduction of stock and bond mutual funds with draft writing privileges and low nominal interest rates.
B. high nominal interest rates.
C. the introduction of stock and bond mutual funds with draft writing privileges along with high nominal interest rates.
D. as presidential election years near the velocity of money increases.
Answer: C
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The IS—LM model predicts that a temporary beneficial supply shock
A) increases output, national saving, and investment, but not the real interest rate. B) increases output, national saving, and the real interest rate, but not investment. C) increases the real interest rate, investment, and output, but not national saving. D) increases output, national saving, investment, and the real interest rate.
A monopolist faces the inverse demand curve P = 60 - Q. It has variable costs of Q2 so that its marginal costs are 2Q, and it has fixed costs of 30. At its profit-maximizing output level, the monopoly's average cost is
A) 11. B) 13. C) 17. D) 21.5.