According to the Quantity Theory, in the Long Run, an Increase

question 237

Multiple Choice

According to the quantity theory, in the long run, an increase in the growth rate of ________ leads to an increase in the ________.

• A) real GDP; inflation rate
• B) the quantity of money; growth rate of real GDP
• C) the quantity of money; inflation rate
• D) real GDP; growth rate of velocity

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Definitions:

Profit-Maximizing Quantities

The level of output at which a firm maximizes its profit, determined by the point where marginal cost equals marginal revenue.

Occupational Licensing

The laws of state or local governments that require that a worker satisfy certain specified requirements and obtain a license from a licensing board before engaging in a particular occupation.

Exclusive Unionism

The policy, pursued by many craft unions, in which a union first gets employers to agree to hire only union workers and then excludes many workers from joining the union so as to restrict the supply of labor and drive up wages. Compare with inclusive unionism. The policies typically employed by a craft union.

Imperfectly Competitive Input Markets

Markets where the factors of production (inputs) are bought and sold, and where no single buyer or seller can influence prices significantly due to the presence of many competitors, but not enough for perfect competition.