If financial news broadcasts reported that inflation was likely to rise significantly next year, what would most likely happen to the velocity of circulation?
A. Velocity will decrease.
B. Velocity will increase.
C. Velocity will remain constant.
D. Velocity is unrelated to inflation.
Answer: B
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Which of the following is characteristic of the marginal revenue product schedule for a resource?
a. It approximates the firm's demand curve for the resource. b. It measures the change in total revenue resulting from employing an additional unit of the resource. c. It is determined by multiplying the marginal product of the resource by the marginal revenue of the good produced. d. All of these are true.
A reduction in the capital gains tax, often advocated by proponents of supply-side economics, is supposed to stimulate increased
a. consumer spending. b. net exports. c. investment spending. d. government spending.