A normal good is a good whose quantity demanded
A. rises when its price falls.
B. falls when the price of a related good falls.
C. falls when the consumer’s total utility rises.
D. rises when the consumer’s real income increases.
Answer: D
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To find the market demand curve for a product, we sum the individual demand curves a. vertically
b. diagonally. c. horizontally. d. perpendicularly.
Figure 4-9
Moonshine" is illegal home brew made by adding sugar to accelerate corn fermentation. Ten pounds of sugar are necessary to make a gallon of moonshine. In the mid-1970s, the price of sugar tripled and the price of moonshine skyrocketed from $6 to $15 a gallon. Which graph in Figure 4-9 best illustrates this?
a.
1
b.
2
c.
3
d.
4
Suppose the reserve ratio is 25% and banks do not hold excess reserves. When the Fed sells $40 million of bonds to the public,
A) bank reserves increase by $40 million and money supply could increase by a maximum of $40 million. B) bank reserves increase by $40 million and money supply could increase by a maximum of $160 million. C) bank reserves decrease by $40 million and money supply could decrease by a maximum of $40 million. D) bank reserves decrease by $40 million and money supply could decrease by a maximum of $160 million.
Which term refers to a legally established maximum price that firms may charge?
A) a tariff B) a price ceiling C) a price floor D) a subsidy