The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price
a. True
b. False
Indicate whether the statement is true or false
True
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Suppose that, initially, the nominal interest rate is 6 percent and the inflation rate is 3 percent. If the inflation rate increases to 6 percent, what will be the new nominal interest rate?
A) 6 percent B) 1 percent C) 11 percent D) 9 percent
A rightward shift of the BP curve occurs with a
a. fall in the exchange rate. b. cut in taxes. c. decrease in government spending. d. an increase in exports.
The four important characteristics that define a perfectly competitive market are:
A. standardized good, full information, no transactions costs, participants are price takers. B. standardized information, finished good, no transactions costs, participants are price makers. C. standardized good, same information for buyer and seller, low transactions costs, participants are price takers. D. standardized good, full information, no transactions costs, participants are price makers.
Other things constant, which of the following would cause the M1 money supply to decline?
a. an increase in the quantity of U.S. currency held overseas b. a shift of funds from interest-earning checking deposits to money market mutual funds c. a reduction in the general public's holdings of currency outside of banks because debit cards have become more popular and widely accepted d. a shift of funds from money market mutual funds into stock and bond mutual funds because the fees to invest in the latter have declined