The Federal Reserve System was established
A. at the request of farmers to keep down interest rates.
B. because Americans believe in centralization of authority.
C. after four severe bank panics between 1873 and 1907.
D. as part of the Treasury Department.
Answer: C
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If households view a tax cut as temporary, then the tax cut
a. has no effect on aggregate demand. b. has more of an effect on aggregate demand than if households view it as permanent. c. has the same effect as when households view the cut as permanent. d. has less of an effect on aggregate demand than if households view it as permanent.
If a consumer doubles her quantity of ice cream consumed when her income rises by 25%, then her income elasticity of demand for ice cream is
A) 8.0. B) 4.0. C) .25. D) .08.
If the exchange rate between the U.S. dollar and the Japanese yen is $1 = 200 yen, then the dollar price of yen is
A. $.005. B. $.05. C. $.50. D. $5.
Your boss wants to know if you should lay off any workers. You answer that you should lay off workers if the
A. marginal revenue product of labor is equal to the nominal wage rate. B. marginal revenue product of labor is greater than the nominal wage rate. C. marginal product of labor is greater than or equal to the real wage rate. D. marginal product of labor is less than the real wage rate.