If elasticity of demand is 0.7, elasticity of supply is 0.7, and a 5 percent excise tax is levied on the good:
A. consumers pay 50 percent of the tax.
B. consumers pay 5 percent of the tax.
C. sellers pay 5 percent of the tax.
D. sellers pay 100 percent of the tax.
Answer: A
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In the above figure, the demand for loanable funds curve is drawn for the average expected profit. If the real interest rate is constant at 6 percent and the expected profit rises, the amount of loanable funds demanded will be
A) less than $450 billion. B) $450 billion. C) between $300 billion and $450 billion. D) greater than $450 billion.
In the 1970s, the Fed selected an interest rate as an operating target rather than a reserve aggregate primarily because it
A) had no interest in targeting a monetary aggregate, as evidenced by its unwillingness to target a reserve aggregate. B) was still very concerned with achieving interest rate stability. C) was committed to targeting free reserves. D) was committed to the real bills doctrine.
If our government cuts taxes, then we will see
a. an upward movement along the AD curve b. a downward movement along the AD curve c. the AD curve shift to the left d. the AD curve shift to the right e. the AS curve shift to the right
When marginal product ________ average product, average product must be ________.
A. is less than; increasing B. is greater than; increasing C. is greater than; decreasing D. Any of these is possible.