Which of the following goods (with their respective income elasticity coefficients in parentheses) will most likely suffer a decline in demand during a recession?
A. Dinner at a nice restaurant (+1.8)
B. Chicken purchased at the grocery store for preparation at home (+0.25)
C. Facial tissue (+0.6)
D. Plasma screen and LCD TVs (+4.2)
Answer: D
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A rise in the multifactor productivity index means that at each (K/N) we have (Y/N) ________, which shifts the (S/N) curve ________, resulting in a movement of the steady-state intersection to the ________
A) rising, downward, left B) rising, upward, right C) rising, downward, right D) falling, upward, left E) falling, downward, left
Governments may intervene in markets to:
A. reduce consumption certain products deemed "bad". B. correct a market failure. C. increase the efficiency of the market. D. all of the above are reasons why governments intervene in market.
A commercial bank has checkable-deposit liabilities of $500,000, reserves of $150,000, and a required reserve ratio of 20 percent. The amount by which a single commercial bank and the amount by which the banking system can increase loans are respectively:
A. $30,000 and $150,000 B. $50,000 and $250,000 C. $50,000 and $500,000 D. $100,000 and $500,000
The market demand function for wheat is Qd = 10 - 2P and the market supply function is Qs = 4P - 2, both measured in billions of bushels per year. Suppose the government wants to increase the price of wheat to $3/bushel and they impose a price floor to achieve their goal. What is the size of the consumer surplus?
A. $4 billion B. $8 billion C. $10 billion D. $6 billion