The costs in time and effort incurred by people and firms who are trying to minimize their holdings of cash because of inflation are called
A) menu costs.
B) shoe leather costs.
C) transactions costs.
D) imperfect competition costs.
B
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Refer to Figure 6-12. Suppose the diagram shows the supply curves for a product in the short run and in the long run. Which supply curve represents supply in the short run and which curve represents supply in the long run?
A) Either SA or SB could represent supply in the long run; in the short run the supply curve must be a horizontal line. B) SA represents supply in the short run and SB represents supply in the long run. C) Either SA or SB could represent supply in the short run; in the long run the supply curve must be a vertical line. D) SB represents supply in the short run and SA represents supply in the long run.
If the money supply is $600 and nominal income is $3,600, the velocity of money is
A) 1/60. B) 1/6. C) 6. D) 60.