Suppose the economy is closed with national saving of $3 trillion, consumption of $10 trillion, and government purchases of $4 trillion. What is GDP?
a. $3 trillion
b. $9 trillion
c. $11 trillion
d. $17 trillion
d
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Suppose a 25% off sale on post-holiday merchandise creates a 50% increase in post-holiday sales. The price elasticity of demand is:
A) 2.0. B) .75. C) .50. D) .25. E) none of the above.
With asymmetric information among consumers and positive search costs c, all the other firms in the market are charging a monopoly price Pm. A firm may lower its price
A) by less than c to attract more buyers when there are many firms in the market. B) by more than c to attract more buyers when there are many firms in the market. C) by less than c to attract more buyers when there are few firms in the market. D) by more than c to attract more buyers when there are few firms in the market.
If banks are fully loaned out, have no excess reserves, and the legal reserve requirement is raised, the amount that banks can lend is
a. reduced and the money supply contracts b. reduced and the money supply expands c. reduced and there is no change in the money supply d. increased and the money supply expands e. increased and the money supply contracts
If the Fed increases the discount rate, commercial banks pay a ________ interest rate if they borrow money from the Fed and will therefore ________
A) higher; borrow more money from the Fed and make more loans to consumers B) higher; deposit more money into their reserves at the Fed C) lower; borrow more money from the Fed and make more loans to consumers D) lower; borrow less money from the Fed and make fewer loans to consumers E) higher; borrow less money from the Fed and make fewer loans to consumers