Assume the price of pizza decreases. As a result, your real income increases and you increase the quantity of pizza purchased each month. This is an example of the:
a. substitution effect.
b. income effect.
c. revenue effect.
d. consumer price effect.
b
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When checks are exchanged between banks, the Fed oversees the banks to ensure the appropriate funds have been transferred. This is known as
A) check kiting. B) check floating. C) check balancing. D) check clearing.
Suppose that the price level does not change while real GDP decreases. As a result,
A) the quantity of money demanded decreases and there is a movement downward along the demand for money curve. B) the supply of money curve shifts leftward. C) the demand for money increases and the demand for money curve shifts rightward. D) the demand for money decreases so that households and firms hold smaller amounts of money. E) the supply of money curve shifts rightward.
Using the quantity theory of money, in the long run a 3 percent increase in the quantity of money leads to a 3 percent
A) increase in real GDP. B) decrease in the price level. C) increase in the price level. D) decrease in the real interest rate. E) increase in the real interest rate.
Suppose that the percentage change in demand is 10%, the price elasticity of demand is 1, and the percentage change in the equilibrium price is 3.33%. What is the price elasticity of supply?
A. 0 B. 1 C. 2 D. 3