If a good is inferior, the income elasticity of demand must be
A. negative.
B. positive and greater than 1.
C. merely positive (not necessarily greater than 1).
D. zero.
Answer: A
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If the Fed makes a discount loan of $2 million to a commercial bank, the Fed's balance sheet will show
A) an increase in discount loans of $2 million and an increase in bank reserves of $2 million. B) an increase in discount loans of $2 million and a decrease in bank reserves of $2 million. C) a decrease in discount loans of $2 million and an increase in bank reserves of $2 million. D) a decrease in discount loans of $2 million and a decrease in bank reserves of $2 million.
The Fed and the government are working against each other if, as the government cuts taxes to promote economic growth, the Fed
A. sells government securities. B. buys government securities. C. lowers the discount rate. D. lowers the prime rate.
Suppose the supply of Malaysian rubber increases. If U.S. producers purchase this rubber as an input, in the United States, this would cause a
A) rightward shift of the AD curve. B) leftward shift of the AD curve. C) rightward shift of the SRAS curve. D) leftward shift of the SRAS curve.
An upward-sloping short-run aggregate-supply curve is represented by which of the following equations?
a) Quantity of output supplied = Natural level of output + a(Actual price level + Expected price level) b) Quantity of output supplied = Natural level of output - a(Actual price level - Expected price level) c) Quantity of output supplied = a(Natural level of output) + (Actual price level - Expected price level) d) Quantity of output supplied = Natural level of output + a(Actual price level - Expected price level)