According to the monetarists, the rise in (M1) velocity in the mid-1990s can be attributed to
a. changes in the type of bank deposits that are available to the public.
b. new legal ceilings imposed on the deposit rates financial institutions are permitted to pay depositors.
c. the phasing out of legal ceilings on the deposit rates financial institutions are allowed to pay depositors.
d. Both a and b
e. Both a and c
E
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If the supply of a good decreased, what would be the effect on the equilibrium price and quantity?
a. Price would increase, and quantity would decrease. b. Price would decrease, and quantity would decrease. c. Price would increase, and quantity would increase. d. Price would decrease, and quantity would increase.
Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that
a. the nation is producing beyond its capacity, so inflation will occur. b. the nation is not using all available resources or is using inferior technology or both. c. the nation is producing an efficient combination of goods. d. there will be a large opportunity cost if the nation tries to increase production of any good.